- House builders on the front foot, while airlines dragged down again
- HL investor confidence survey shows Investor confidence in the UK fell by 4% in September compared to August,
- This compares to a 4% rise in August compared to July after social distancing and restrictions eased.
- Confidence in the US also fell by 5%, as vaccination rates remain stubbornly low in some states.
- Confidence in global emerging markets saw the largest rise.
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown
''There was a dose of Monday motivation for the FTSE 100, which opened up 0.6% with house builders leading the upwards drift, as the red hot housing market shows little sign of cooling. But overall worries about inflation persist, and are holding back more dramatic gains. Friday's figures showing that US producer prices increased in August is yet another stone in the data trail, indicating that inflation is likely to linger for longer. Supply chain issues have been dominating results and trading updates in the last few weeks, with ABF the latest to warn that problems in ports could delay the switchover to Autumn/Winter ranges. With worries about unprecedented shortages across retail even the usually resilient NEXT was not immune, with shares down by 1.4%.The boss Lord Wolfson has already hit out at post-Brexit immigration rules, which have exacerbated the shortage of HGV drivers.
These concerns are reflected in the HL investor confidence survey which showed confidence in the UK market has fallen by 4% and by 5% for the US in September. Higher prices alongside a weaker recovery, as evidence in recent US jobs data and also the UK's GDP reading for July is leading to fears of a stagflation scenario emerging. Ryanair's warning that prices will rise next year due to fewer flights, inflation and higher taxes did little to relieve the pain of rival easyJet. Shares plummeted again falling by 15% in early trading after warnings that it is likely to take longer to recover than its competitors. British Airways owner IAG struggled to stay positive, as the cloud of uncertainty remains over the UK's traffic light system which has been blamed for dampening consumer demand. But Ryanair's shares rose after indication the company will keep prices low over the next few months to win market share from beleaguered rivals.
Investor confidence in Japan has surged after Prime Minister Yoshihide Suga announced he was stepping down. There's hope a new leader will get a handle on soaring infection rates which has prompted the introduction of a state of emergency. The spectre of inflation though is also hovering with wholesale price increases at almost 13 year highs. Companies will be under pressure to pass on costs to customers, but with consumer demand already weak, that could act as a further drag on the economy. This is far from a pure Japanese dilemma. The tricky tightrope between absorbing higher costs, to keep demand buoyant and increasing prices, to maintain margins is one which many companies will be trying to balance on in the months to come.''
*The investor confidence index is compiled by surveying clients on a monthly basis. Each month we send the investors' confidence survey to 6,000 random clients and there is a representative split of our clients by age. On average 10% of clients respond (around 600 clients).
Clients are asked to say how likely they are to invest in a certain sector over time frames of 6 months, 1 year and 3 years, by selecting Very Likely, Likely, Neither Nor, Unlikely or Very Unlikely.
Global Sectors / % Change September 2021 vs August 2021
Asia Pacific / -2%
European / 1%
Global Emerging / 6%
Japanese / 4%
North American / -5%
UK / -4%
Average % Change / 0%
NOTES FOR EDITORS
Senior Investment and Markets Analyst, Hargreaves Lansdown
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