Lloyds Bank’s measure of investor sentiment stooped to a score of three per cent in September form 12 per cent in August, according to survey data released this morning.
There were sharp declines in sentiment towards stocks in emerging markets, the UK and Japan as well as commodities.
Many commodities have plummeted in price as growth in China, the world’s second largest economy and one of the world’s biggest importers of commodities, loses momentum.
Investors were also concerned about the Federal Reserve raising interest rates this week for the first time since 2006. Polarised views on whether the US central bank will opt to hike has led to further market volatility, Lloyds Bank said.
Eurozone stocks saw an increase in optimism, possibly due to the European Central Bank’s ongoing stimulus measures. Gold, often seen as a safe haven in stormy markets, also saw a rise in sentiment.
“Investor sentiment has this month taken a massive step backwards driven by concerns about the unfolding trajectory of economic activity in China. As the world’s second-biggest economy and its understandable powerhouse status on the world stage, China’s troubles will inevitably impact the global economy,” said Ashish Misra, head of portfolio specialists at Lloyds Bank Private Banking.
“In a reversal of last month, sentiment towards gold has jumped in September. In times of volatility, people look to the perceived safe-haven qualities of gold and this has once again been the case in recent weeks, which we may expect to continue in the short-term as uncertainty and investor anxiety holds to present elevated levels.”