European investor confidence has fallen more than 10 points this month in the latest survey from Hargreaves Lansdown.
According to the firm, continental respondents to its HL Confidence Index reported that their confidence rose between May and June from 56 to 61, but has since dropped to 50. Results from Hargreaves Lansdown indicate that confidence among European investors may be the lowest in the world, with that of Asia-Pacific investors graded at 71, 64 among global emerging, 67 in Japan, 71 in North America, and 57 in the UK.
Emma Wall, head of investment analysis and research at Hargreaves Lansdown, said: “Rising inflation, political uncertainty and growing concerns about a global recession has hit investor confidence hard this month. Across the globe, central banks are raising interest rates in a bid to stem inflation – but with so much out of policy committee’s control, the immediate outlook remains bleak. The war in Ukraine continues to dominate prices, markets and the economic outlook.”
She added: “Over the weekend, Russia and Ukraine signed a deal which would allow grain to be exported from Ukrainian ports which immediately saw wheat prices fall to levels last seen pre-invasion. Yesterday, president Putin ordered attacks on the one of the ports, causing wheat prices to rise again – and signalling to the world that the war – and associated political and price uncertainty – is far from over.”
While confidence has fallen in all global sectors, said Hargreaves Lansdown, the largest drop was in the North American sector, which fell by 20 points. The firm said that the survey is sent out randomly to 6,000 of their clients, with around 10% responding.
Wall said that global investors were responding to the uncertainty by selling out equity funds and moving instead to lower-risk assets.
She added: “Amongst the most bought funds on the HL platform this month have been both money market funds, and multi-asset funds invested for capital preservation, such as Troy Trojan, and the Personal Assets investment trust.”
The uncertainty is currently being reflected in markets on the continent. Germany’s DAX is down over the week, having fallen from 13,308.41 on 19 July to 13,109.63 at the time of writing. A steeper drop has been since in France’s CAC 40, which has seen growth tail off over the same period. Meanwhile, recent days have seen Spain’s IBEX 35 turn down sharply.