LONDON (Reuters) – Investor confidence fell to its lowest level in 20 years after turmoil over US banks and fears of a renewed recession this month, Bank of America’s monthly survey showed.
BofA’s own “financial market risk index”, which measures investor anxiety, jumped to 7.7, showing a dramatic decline in risk levels. It was slightly below its 2022 surge on the back of the conflict in Ukraine, but above the peaks of the financial crisis and the coronavirus pandemic.
The investigation took place after the failures of two major US banks, Silicon Valley Bank and Signature, and before UBS’s decision to buy Swiss financial giant Credit Suisse (CS) on May 19.
European fund managers are particularly pessimistic.
Although the survey was conducted before UBS’s decision to buy CS, almost a third said a “systemic credit event” was the biggest risk to the market. That’s up from just 8% in February this year.
Inflation fell from the highest risk factor for the first time in nine months. The US “shadow banking” sector was identified as the most likely risk factor.
The risk of recession and stagflation also increased again.
A monthly survey by the German European Economic Center (ZEW) also showed a sharp drop in investor sentiment.
