UK - Confidence among institutional investors has risen for the first time this year, new figures from State Street Associates reveal.
The firm, which is part of State Street Global Markets, said that the State Street Investor Confidence Index rose to 87 in August, up 2.4 points on July. But the index is still down 24 points on its position 12 months ago.
The rise in institutional investor confidence comes despite oil prices rising close to $50 per barrel, disappointing economic news and higher interest rates.
State Street senior strategist Michael Metcalfe attributed the rise to faith in the forecasts of US Federal Reserve chairman Alan Greenspan who believes that markets, households and businesses are well placed to survive changes in monetary policy.
Metcalfe said: “All of this month’s releases, US employment, consumer confidence and retail sales have been lower than expectations; in some cases quite substantially so. Significantly, though, investors have responded at this time by increasing their allocation to risky assets for the first time this year.
“Although the rise is modest compared to the 24-point fall in the year to date, the rise in the face of disappointing economic news, higher interest rates and higher oil prices is indicative of investors’ faith in the Fed’s recent mantra that the current ‘soft patch’ in the economy is temporary.”
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