Global investors shied away from equities in the final month of 2016, ending a year that saw seismic events including the UK's vote to leave the EU and the election of reality TV star Donald Trump as US president.
According to State Street's Investor Confidence Index, investor faith in the US finished at 94.2 points in December, down 3.4 points from the November figure.
The drop in global investor confidence contrasted with a boost in consumer confidence in the US to a 12-year high, a boost for which Mr Trump took full credit.
A reading of 100 for the State Street index is neutral, signifying investors are neither increasing nor decreasing their long-term allocations to risky asset classes such as equities. A reading below that shows investors are decreasing their allocation to such asset classes.
Unlike many investor confidence measures, the State Street ICI is based on actual trades rather than the stated views of investors.
State Street's Kenneth Froot, who co-developed the ICI, linked the drop in investor confidence to the election of Donald Trump in November and the US Federal Reserve's decision to lift interest rates for only the second time since the global financial crisis.
“Heading into 2017, investors are likely looking for greater clarity on their over-arching concerns regarding a Trump presidency and the hawkish tilt that accompanied the Fed's December rate hike,” he said.
The figures contrasted with US consumer confidence figures for December, which stood at 113.7 in December, their highest level since 2004.
US president-elect Donald Trump took credit for this rise in consumer confidence, tweeting on Tuesday (27 December): “The US Consumer Confidence Index for December surged nearly four points to 113.7, THE HIGHEST LEVEL IN MORE THAN 15 YEARS! Thanks Donald!” (Mr Trump's capitals.)
The previous day, the billionaire businessman-turned-statesman tweeted: “The world was gloomy before I won – there was no hope. Now the market is up nearly 10 per cent and Christmas spending is over a trillion dollars.”
Mr Trump will take over the presidency from Barack Obama on 20 January.
james.fernyhough@ft.com
