After an improvement in September, European investor confidence dropped in October from 123.9 to 115.5, bringing down global investor sentiment to 115.1 points.
State Street Associates director Kenneth Froot said European confidence had “crested in September at an all-time high”, but it was “not surprising” to see it come back down.
“The decline may be driven by deflationary fears in the region,” Mr Froot said.
“Although the European Central Bank has engaged in covered-bond purchases, German opposition to full-blown quantitative easing may have left investors wondering whether or not the ECB can do enough to combat headwinds to growth,” he said.
In contrast, State Street’s Investor Confidence Index for North America increased by 5.9 points to 108.5, while the Asian Investor Confidence Index rose 2.1 points to 99.5.
State Street Global Markets senior vice president and head of global macro strategy Michael Metcalfe said the “correction in global investor confidence” occurred in spite of a rise in the US.
“This highlights the importance of weakness outside of the US as the main cause of the recent turbulence in financial markets,” Mr Metcalfe said.
An index reading of 100 indicates a neutral position, according to State Street, and is the point at which investors are neither increasing nor decreasing their long-term allocations to risk assets.
