Confidence in US stocks slipped 3%, reflecting UK investors’ anxieties around weaker-than-expected jobs data, ongoing interest rate speculation and political uncertainty ahead of the battle between Hillary Clinton and Donald Trump for the presidency. The movement in US equities was the biggest drop in all of the asset classes during the month.
“Given the uncertainty around the outcome of the forthcoming presidential election it is unsurprising that investors are increasingly nervous about US equities,” said Lloyds Private Banking chief investment officer Markus Stadlmann. “Despite this we are expecting news on US monetary policy in December so we could see sentiment change significantly in coming months.”
The total net sentiment for US equities remains positive, albeit 5.2% lower than the year before.
Eurozone shares, on the other hand, continued to be one of the least loved assets by UK investors. Sentiment in the asset class declined again this month (2.8%), taking the net sentiment down to -40%. According to Lloyds’ criteria, sentiment around EU equities is approaching a level where investors are overly pessimistic about the asset class.
However, Lloyds’ monthly findings showed that, in general, investors remained relatively unfazed by impending geo-political matters.
The attitude toward UK stocks, for instance, improved slightly from the previous month (0.1%) and the change in year on year net sentiment is 16.5% higher. Investor confidence in UK property, one of the sectors most negatively impacted in the initial Brexit fallout, improved by 8.4% during the month.
UK fixed income
The same cannot be said for UK fixed income vehicles at present, Stadlmann said, because “bonds are currently looking overvalued, which is causing gilt yields to rise.”
UK gilts dipped in popularity by 2.1% within the month, while UK corporate bonds fell almost as far as US shares on the sentiment index, losing 3.1%.
Lloyds data also indicated gold benefited off the back of the uncertainty in equities and UK fixed income, lifting it by 3.7%. Commodities were the most improved in UK investors’ eyes with net sentiment rocketing up by 9.1%.