The measure of investor confidence shows a bounce from a downbeat start to 2022, although the developments today in Ukraine are likely to knock sentiment back when results next come out, judging by falling stocks today.

A global barometer of the buying and selling behavior of investors showed that they actually grew more bullish in February compared with January’s subdued start to the year, although sentiment is likely to sour following today’s reports of Russia’s invasion of Ukraine.

State Street’s Investor Confidence Index® increased to 103.9, up 13.9 points from January’s revised reading of 90.0. The increase was led by a 12.6 points jump in the North American ICI to 106.2 as well as a rise of 8.3 points in the European ICI to 93.9. The Asian ICI, meanwhile, fell a modest 0.2 points to 96.9.

The index works in the following way: the greater the percentage allocation to equities, the higher risk appetite or confidence. A reading of 100 is neutral; it is the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets. The index differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors.

“Investors’ sentiment improved sharply in February, with the index recording one of its biggest monthly gains since recovering from lows established in the early months of the pandemic,” Marvin Loh, senior macro strategist at State Street Global Markets, said.

“Falling COVID caseloads and relaxed restrictions drove the improving outlook even as the hawkish view for central banks continues in the face of upside inflation surprises. While the index’s movement back above 100 reflects a more constructive view on risk assets, this outlook will be tested in coming months with growing geopolitical concerns and widespread rate hikes across developed markets. This may be especially true in the case of Europe, which has the lowest reading amongst the three regions tracked,” Loh said.