Sentiment falls in October as market sell-off spooks investors

The Global ICI fell 3.4 points to 84.4 last month from September’s reading, while the North American ICI dropped 2.6 points to 81.8.

The European ICI posted the largest fall of the month, declining 9.3 points to 90.9 as confidence among European asset managers waned, while the Asia ICI saw a small drop of 0.3 points to 99.6.

Brussels is currently fighting a war on two fronts with continued uncertainty of the Brexit negotiations and the ongoing saga with Italy’s budget.

“Confidence has fallen further in October and is more widespread, especially in Europe where not only are political risks rising, but growth is disappointing too,” Kenneth Froot, founding partner of FDO Partners and State Street Associates, commented.

The index measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors. A score of 100 is neutral.

Froot said the drop in investor confidence was due to October’s market sell-off.

The SP 500 suffered its worst month in seven years, falling 6.9%, while the DOW Jones tumbled 5.1%, its biggest monthly decline since January 2016 and the Russell 2000 dropped 10.9%, its worst performance since 2011.

‘This time may be different’: Investors urged not to ignore warning signs from ‘gut-churning’ market sell-off

“As major stock indices were hitting record highs near summer’s end, there were signs that institutional investors were reducing risk exposure,” Froot continued. “As we have progressed into fall, equities have declined further as the VIX has doubled.

“And amid concerns about high valuations and whether earnings may have peaked, some market participants seem to be anxious over a prolonged period of risk aversion,” he added.

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