The Hargreaves Lansdown Investor Confidence Index climbed 7 points this month, from a reading of 69 in July to a reading of 76 in August. This is still well below the long term average level for the index of 99 points.
Expectations of an interest rate rise edged back, with 20% of respondents expecting a rate hike in the next 6 months, down from 45% in July.
Confidence is highest in the Asia Pacific region and Global Emerging Markets, with confidence scores of 69.3% and 68.8% respectively.
Sentiment towards US shares is still positive but waning, down from 69.7% at the beginning of the year to 58.3% in August (a reading above 50% indicates positive sentiment). In contrast confidence in the European stock market has enjoyed a resurgence, from 49.0% at the beginning of the year to 64.3% today.
The UK is the regional stock market with the lowest confidence score, at 56.8%. Japan sits near the middle of the pack with a score of 59.8%.
Laith Khalaf, Senior Analyst, Hargreaves Lansdown:
'Investors are in a better mood this month, but they are still pretty wary about the short term prospects for the UK stock market. Part of the problem is the economic climate in the UK is not currently conducive to optimism, with growth falling and consumer incomes under pressure. Ten years on from the start of the financial crisis, investors are also more guarded than they were about letting high spirits get the better of them.
Investors are more positive towards overseas markets than the UK right now, which may reflect concerns over Brexit and the weaker economic data we have seen in the first half of this year. The UK stock market is globally well-diversified however, with a large chunk of its earnings coming from abroad, so it’s actually quite an international investment in and of itself.
Last month’s spike in expectations of an interest rate rise has been firmly quashed, with inflation falling back, economic growth faltering, and the Monetary Policy Committee proving more dovish. This certainly isn’t the first time that hopes of an interest rate rise have been dashed, and it probably won’t be the last.'