Investor confidence plummets as inflation soars

According to Hargreaves Lansdown, its investors’ confidence in the stock market is declining. Photo: Reuters/Brendan McDermid

Investor confidence has been shaken this month by rising inflation, political uncertainty and growing concerns about a global recession, according to new data.

According to Hargreaves Lansdown, its investor confidence index fell 10 points in July, to 57.

Confidence fell across all global sectors, with the biggest drop being the North American sector, which fell 20 points.

Next came Asia-Pacific which fell from 89 to 77, and the emerging global sector which fell 11 points to 64.

Confidence in the UK sector fell 10 points in the month to 57, while Europe and Japan fell nine and seven points respectively.

Confidence in the North American sector fell the most during the month.  Graphic: Hargreaves Lansdown

Confidence in the North American sector fell the most during the month. Graphic: Hargreaves Lansdown

The Investor Confidence Index is compiled by surveying HL clients on a monthly basis. Each month, the company sends the trust survey to 6,000 random customers, with one representative broken down by age. On average, about 10% of customers respond.

“Central banks around the world are raising interest rates in a bid to stem inflation – but with so much beyond the control of the political committee, the immediate outlook remains bleak. The war in ukraine continues to dominate prices, markets and the economic outlook,” said Emma Wall, head of investment analysis and research at HL.

“Over the weekend, Russia and Ukraine signed an agreement that would allow the export of grain from Ukrainian ports, which immediately saw wheat prices plummet to levels not seen before the invasion. Yesterday , President Putin ordered attacks on one of the ports, causing wheat prices to rise again – and signaling to the world that war – and the political and price uncertainty associated with it – is far from over. finished.

“Global investors have responded by selling equity funds, instead of turning to lower-risk assets. Among the top-bought funds on the HL platform this month are both market funds money market and multi-asset funds invested for capital preservation, such as Troy Trojan and the investment trust Personal Assets.

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It comes as UK consumer confidence also remained at a historic low of -41 this month, as the impact of soaring food and fuel prices and rising interest rates continued to cloud the picture. financial mood of the nation.

According to the GfK Barometer, the overall index score was stable in July compared to the previous month, with two measures up, one down and two remaining the same.

Meanwhile, U.S. consumer confidence fell to nearly 18 months in July amid lingering worries about rising inflation and interest rates, pointing to slowing economic growth at the start of the third trimester.

The Conference Board survey showed consumers were cutting back sharply on their spending plans, with the share of respondents intending to buy white goods such as refrigerators and washing machines in the next six months, the lower since the beginning of the current series at the end of 2010.

Watch: How does inflation affect interest rates?