Investor confidence rises as inflation expectations fall

• The HL Investor Confidence Index has increased to 78.
• Confidence has risen in the Asia Pacific, European, Global Emerging and UK markets.
• Confidence in the US has fallen slightly – but this hasn’t stopped investors snapping up funds.
• All eyes will be on the latest UK inflation figure due this week to confirm more positive outlook.

Emma Wall, head of investment analysis and research, Hargreaves Lansdown:

“HL’s Investor Confidence Index rose in August as economists and investors alike predict that the worst of the inflationary period is behind us. Expectations this week amongst economists is that the July inflation rate, due to be published on Wednesday, will reveal a slower rate of inflation for the UK. This regional outlook is reflected in investors views towards the domestic market, with confidence in the UK jumping significantly in this month’s Index. Conversely it has dropped by one point in the US, where we saw inflation rise slightly last week – albeit to a much lower level than in recent history.

Despite investors saying that they feel less confident about the region, trading reveals a different story. The most bought funds and trusts this month are US-centric, US trackers, active funds and global and tech investments that are US-biased. 

Confidence has risen in the European market and across emerging markets too. But inflation – and associated higher interest rates – is still driving consumer and corporate decisions across the globe, from the slowing housing market, to striking public sectors, to gilt purchases. Higher yields have sent money market funds into the top 10 most bought funds for the first time – a semi-permanent reminder that despite markets rallying, all is not well – or at least, normal – in the economic cycle. All eyes will therefore be on the Bank of England this week to confirm the more positive outlook.”

Investor Confidence – Global Sectors

HL data