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State Street: Global risk appetite and stock buying surged in March

CHARTRES, FRANCE – AUGUST 16: Madeline Groves of Australia competes in the 200m Women’s Butterfly on day two of the FINA Swimming World Cup 2015 on August 16, 2015 in Chartres, France. (Photo by Aurelien Meunier/Getty Images)

The recovery in commodity and stock markets has been accompanied by a recovery in investor confidence and risk appetite, the latest release of the State Street Global Exchange Investor Confidence Index (ICI) shows.

“The Global ICI increased to 114.6, up 8.0 points from February’s revised reading of 106.6 State,” Street said.

SSGE Investor Confidence Index March

But it’s clear that the Fed’s more dovish tone after the January and March meetings has assuaged investor fears and increased their appetite for risk in North America materially more than other regions. State Street said that the North American ICI increasing from 109.4 to 123.6, while the European ICI rose from 90.2 to 95.3, and the Asian ICI from 111.5 to 112.2.

That increase in confidence has in turn been accompanied by increased exposure to global stock markets. Indeed State Street said that the “index assigns a precise meaning to changes in investor risk appetite: the greater the percentage allocation to equities, the higher risk appetite or confidence.”

A reading of 100 is neutral and at 114.6 the global ICI is the highest its been in the past six months. That’s good news for markets. But it also possibly reflects that after the weakness of the early part of the year the goods news is now priced back into stocks, and markets, once more.

All of which might help explain why further, or sustainable, gains have been harder to come by lately.

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