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Jan 26, 2016

Investor confidence drops in January as stocks and oil plunge

State Street survey shows North American investors lead decline in optimism

Global investor confidence fell in January, led by North American investors, as the price of oil plunged and stocks declined around the world, according to a survey by State Street.

State Street’s Global Investor Confidence Index (ICI) fell 1.7 points from December’s revised reading of 110.5, reaching 108.8 points, the firm says. The drop was matched exactly by the decline in the North American index, which also fell 1.7 points to 108.8.

The Asian ICI dropped 1.5 points to 102.9, the lowest measure among the main regions of the world this month, while the European ICI declined only slightly, falling 0.1 points to 103.4, State Street says in a press release.

As of January 26, the S&P 500 is on track for its worst performance ever for the month of January, with a decline of 6.9 percent. Chinese stocks fell on average by more than 20 percent in the month and the price of oil is at a 12-year low.

‘We have seen an unprecedented slide in stock markets around the globe,’ says Jessica Donohue, executive vice president and chief innovation officer of State Street Global Exchange. ‘Tumbling oil prices, a reaction to slowing demand in the face of a supply glut, and changing growth dynamics in China chipped away at investors’ confidence over the past month.’

The State Street indexes are in agreement with the Bank of America Merrill Lynch (BofAML) Fund Manager Survey for January, released earlier this month. According to that survey, a net 8 percent of fund managers predict the global economy will strengthen over the next 12 months, the lowest since 2012.

The BofAML survey also shows 12 percent of fund managers believe a global recession is coming in the next 12 months while more investors predict earnings will decline in the year than those who think earnings will rise.