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Investor confidence in commodities rebounds

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18/05/2016
Investor confidence has risen slightly since last month’s record low, with sentiment towards commodities positive for the first time since November, according to the latest monthly survey by Lloyds Bank.

The rebound in sentiment reflects an improvement in actual market performance across most asset classes, the report said.

Although they remain popular with investors, well-known safe havens of gold and UK property have both seen slight falls in sentiment over the last few weeks.

Commodities and emerging markets, on the other hand, have seen improvements in sentiment.

Despite the improved picture, investors seem to have little confidence in UK government bonds and UK corporate bonds at the moment, while eurozone and Japanese equities have the lowest confidence ratings across the board. US equities have also crept into negative territory.

Markus Stadlmann, chief investment officer at Lloyds private Banking, said: “Investor sentiment has become more positive for most asset classes, albeit from a low base. There are growing reservations about investing more money in equities, with the exception of emerging markets. UK Gilt and corporate bond sentiment has fallen considerably, which probably reflects concerns about whether they can deliver positive returns in the future.

“Although they remain popular with investors, the safe haven assets of gold and domestic property have both seen a slight fall in sentiment over the last few weeks. Commodities and emerging markets have both seen improvements in sentiment, a reflection that perhaps UK investors think both of these asset classes are over the worst.”

The majority of the asset classes have shown positive performance over the last month, with only Japanese equities and UK government bonds seeing month-on-month declines of 2.8% and 1.7% respectively.

Year-on-year changes paint a bleak picture with price falls, some significant, across all but two of the 10 asset classes monitored for the index. Gold continues to be the main outlier with a twelve month rise in value of 6.3%. The greatest decline was in commodities with a 28.5% collapse in prices.

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