August saw investor sentiment rebound in the UK, following a sharp fall in July in the wake of the EU referendum. All UK asset classes saw a rise in sentiment last month, according to Lloyds.
“Despite continued market volatility in August all UK asset classes have increased in sentiment, signalling that investor confidence in the UK economy is rebounding at least in the current environment,” said Markus Stadlmann, chief investment officer at Lloyds Private Banking.
UK property and UK equities saw the biggest increase in sentiment month on month; 14.79 and 7.09 percentage points respectively, according to the index. And while attitudes toward the UK recovered, foreign and typically more risky assets fell, despite two prior months of improved sentiment.
US, emerging market and Japanese equities, in particular, suffered sentiment declines due to ongoing speculation around the next move in interest rates and monetary policy and their impact on currency.
Gold retains its position as the preferred asset class (a positive sentiment of 41.26%), with last month’s decline levelling off.
“While the UK looks more resilient in the short-term, there are still reasons for investors to be cautious. We are still yet to see any real shift in monetary policy emerge globally,” commented Stadlmann. “More expansive policies could, over an extended period of time, prepare the ground for a new bull market. On this basis, it is not surprising that investors are still including save havens as part of their asset allocation.”
Investors' desire to seek shelter in the relatively safe haven that gold constitutes could be indicative of greater scepticism about the longer term prospects of the UK economy amid continued post-Brexit uncertainty and volatility, noted Lloyds.