Investor sentiment dips again

However, sentiment remains significantly higher than it was this time last year, when it was -0.24 per cent, suggesting that investors remain relatively upbeat especially when looking at opportunities around the world.

Investor positivity towards UK-listed companies fell significantly this month by 14.42 per cent to score at just 9.06 per cent.

This decline in popularity coincides with the formal triggering of Article 50 which may have led to investors becoming more cautious towards UK equities while they wait to see the political and financial market reactions play out.

The fall was not reflected in actual performance which saw UK equities improving by 0.9 per cent for the month, and 17 per cent for the year.

Investor sentiment towards European equities also rose by 12.29 per cent, from -34.40 per cent to -22.11 per cent suggesting that investors are increasingly less concerned by Europe’s own geopolitical uncertainty. In fact, sentiment towards European equities is up 14.20 per cent year-on-year.

Actual performance of asset classes is positive over a 12 month view.

All assets classes have seen a rise over the last year, apart from UK property which is down 2.7 per cent. However, looking at last month’s performance, it is a less positive picture. Six out of the 11 asset classes have experienced deteriorating performance in the last 30 days.

Commodities saw the biggest drop falling 3.9 per cent. Nevertheless, Eurozone equities and emerging market equities are the best performers on a month-by-month basis up 5.6 per cent and 3.5 per cent respectively.

Markus Stadlmann, CIO, Lloyds Private Bank, said: “April saw a further reduction in sentiment from March with the most dramatic drop being in investors’ sentiment towards the UK. Despite this, we still remain fairly positive about the overall health of the UK economy in 2017.

“In light of Theresa May’s decision to seek a General Election, the volatility of UK equities and bonds could be elevated over the short-term. Overall however, we remain optimistic as a long-term investment strategy (rather than short-term distraction) is key.

“The outlook for global earnings is relatively bright and it is also clear investors are looking further afield for opportunities due to the uncertainty facing the UK. Sentiment towards emerging market shares, closely followed by Japanese equities, shows the biggest increase over 12 months. Conversely, a dip in sentiment towards the US is not that surprising, as the market awaits progress with President Trump’s policies.

“This month’s investor sentiment tallies with our longer-term investment strategy. The fading investor appetite in April for UK corporate bonds, UK government bonds, and UK property, is in line with our recent decision to reduce strategic allocations to those asset classes. However, we agree with the warmer reception that investors are giving to international opportunities, having recently increased our exposure to global equities.”