State Street's Global Investor Confidence Index (ICI) fell in August by 8.7 points to 75.9 in a new sign that the ongoing trade war between the US and China weights on business and investors' mood.
The index fell to its lowest level in four months,down 8.7 points from July's revised reading of 84.6.
Investor confidence across all regions fell, with the ICI in North America decreasing from 80.3 to 72.5 points and the European ICI dropping from 98.6 to 89.0 points. The Asian ICI slipped from 91.8 to 89.2.
This month's investor confidence index results reflect investors' growing concerns about the global economic slowdown and widespread declines in global manufacturing as the trade war between the world’s two largest economies continues to escalate."
Rajeev Bhargava, managing director and head of Investor Behavior Research, State Street Associates, said: "In August, institutional investor sentiment declined once more against a backdrop of downside risks to the economy, increased political uncertainty in Italy, and the possibility of a hard Brexit."
"Monetary and trade policy uncertainty is reducing risk appetite, and investors are watching for changes in interest rate expectations following this year's Federal Reserve conference in Jackson Hole."
Kenneth Froot added: "This month's investor confidence index results reflect investors' growing concerns about the global economic slowdown and widespread declines in global manufacturing as the trade war between the world's two largest economies continues to escalate.
"Investors are expressing renewed risk aversion in the midst of heightened volatility in the financial markets and a renewed inversion of the treasury yield curve."
The Investor Confidence Index was developed by Kenneth Froot and Paul O'Connell at State Street Associates, State Street Global Markets' research and advisory services business. It measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors.
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; it is the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets. The index differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors.