Investor Confidence Surges As Economists Expect An Inflation Decline

Investor confidence is on the rise as inflation expectations decline, according to the HL Investor Confidence Index, which has recently reached a level of 78.

This increase in confidence is particularly notable in various markets, including the Asia Pacific, European, Global Emerging, and UK markets. However, in the US market, confidence has experienced a slight decrease. Interestingly, this hasn’t deterred investors from actively investing in funds.

The UK’s inflation figures, set to be released this week, are being closely monitored as they are expected to confirm a more positive outlook. Emma Wall, the head of investment analysis and research at Hargreaves Lansdown, attributes the rise in the Investor Confidence Index to the prevailing belief among economists and investors that the peak of the inflationary period has passed. Economists are projecting a slower inflation rate for the UK in the upcoming July inflation rate report, which is anticipated to be published on Wednesday. This optimistic regional perspective is reflected in the substantial increase in confidence in the UK market for this month’s Index. Conversely, confidence in the US has seen a minor dip due to a slight rise in inflation last week, albeit not to the extent seen in recent times.

Investor Confidence – Global Sectors

Interestingly, even though investors express reduced confidence in the US region, trading activities paint a different picture. The most popularly purchased funds and trusts this month are centered around the US, including US-centric trackers, active funds, and investments in global and tech sectors with a US bias.

HL data

Confidence has not only surged in the European market but has also extended to emerging markets. Nevertheless, the overarching influence of inflation and its consequence of higher interest rates continue to impact consumer and corporate decisions globally. These effects are visible across various aspects, from a sluggish housing market and labor sector strikes to increased purchases of government bonds (gilts). The push for higher yields has also propelled money market funds into the top 10 most purchased funds, indicating that despite market rallies, the economic cycle is still undergoing some abnormal or unsettling shifts. As such, all eyes are currently focused on the actions of the Bank of England in the upcoming week, with expectations of their confirmation of a more optimistic economic outlook.

Peyman Khosravani

Peyman Khosravani is a global blockchain and digital transformation expert with a passion for marketing, futuristic ideas, analytics insights, startup businesses, and effective communications. He has extensive experience in blockchain and DeFi projects and is committed to using technology to bring justice and fairness to society and promote freedom. Peyman has worked with international organizations to improve digital transformation strategies and data-gathering strategies that help identify customer touchpoints and sources of data that tell the story of what is happening. With his expertise in blockchain, digital transformation, marketing, analytics insights, startup businesses, and effective communications, Peyman is dedicated to helping businesses succeed in the digital age. He believes that technology can be used as a tool for positive change in the world.