EconomyFeb 28 2023

Investor confidence rises in February though hesitancy remains

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Investor confidence rises in February though hesitancy remains
The FTSE 100 rose to new highs this month as investor confidence rebounded (Simon Dawson/Bloomberg)
BySally Hickey

Investor confidence rose 14 per cent in February and is now sitting just below the level it was before Russia invaded Ukraine.

Some 88 per cent of investors feel confident about the UK sector, according to Hargreaves Lansdown’s latest Investor Confidence Survey released last week (February 24).

While confidence in the UK sector is now 4 per cent lower than it was in February 2022, confidence in UK economic growth is still 37 per cent lower than it was before the war broke out.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said the war set off a “chain reaction” sending commodity prices soaring as already-struggling supply chains fractured further.

Confidence is rising but investors are still split on economic growth

“As food, raw materials and energy costs jumped, workers have clamoured for higher wages, pushing inflation even higher, forcing central banks to hike interest rates, squeezing budgets further,” she said.

Streeter noted some of the reasons for the FTSE 100 breaking records this month and rising above 8,000.

“The forces pushing it upwards are defensive in nature, with investors largely seeking safety, security and steadier income, rather than seeking out stocks with high growth potential,” she said.

The reopening of China, potential peaks of inflation and interest rates and lower gas prices have all contributed to a boom in global markets.

“[However], volatility is set to stay a firm feature of stock markets this year as worries about the impact of high prices continue to nag investors.”