The Hargreaves Lansdown Investor Confidence Index tumbled nine points from 114 in June to 105 in July. However the index remains above its long term average of 101, suggesting that investors are still broadly positive about the stock market’s prospects.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “July was a month of bad news on the international stage, and investor sentiment has responded to this. Concern has not yet turned to despondency however; while investor confidence has been set back, it is still relatively high and has only retreated to levels seen little over a year ago.

“This suggests while the mood has moderated, investors are still on balance positive about the prospects for the stock market.”

The vast majority of investors expect interest rates to rise this year according to Hargreaves, with 88 per cent predicting a hike within the year and 39 per cent expecting a rise in the next six months.

Analysis by Hargreaves Lansdown has pinpointed Russia as the world’s cheapest market – though data is limited and momentum remains negative – while the US is the most expensive. The UK sits “somewhere in between”.