The decrease in confidence was felt most keenly in the European market, where confidence dropped from 98.6 in July to 89 in August, the report noted.

Confidence also dropped dramatically in the US from 80.3 in July to 72.5 in August, while investor insecurity was less keenly felt in Asia, where confidence dropped from 91.8 in July to 89.2 in August.

Co-developer of the index Kenneth Froot said the decrease in confidence was unsurprising given ongoing volatility in the sharemarket and fears of a global recession as trade tensions between the US and China continue.

“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,” Mr Froot said.

“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.”

State Street Associates managing director and head of investor behaviour research Rajeev Bhargava added that investors were adopting a “wait and see” approach until it became clear what the US Federal Reserve’s plan was for the US economy.

“Monetary and trade policy is reducing risk appetite, and investors are watching for changes in interest rate expectations following this year’s Federal Reserve conference in Jackson Hole,” Mr Bhargava said.