Optimism and risk appetite have fallen over the last quarter among UK retail investors as August’s market wobble and fears over the US election build, City AM can reveal. Optimism fell 3.5 per cent and risk appetite dropped three per cent in the UK over the last three months, a survey of over 2,500 retail investors from Finimize found.
Two main factors have affected the decision: The market wobble at the start of August which saw stocks temporarily crash and the US election on 5 November . When asked, 52 per cent of UK retail investors said they believed a Donald Trump victory would boost stocks, compared to 40 per cent for Kamala Harris. However, 54 per cent of investors expected Harris to win in the election next month, which could signal a shift in market strategy depending on election outcomes.
“Interest rate cuts and the market chaos in August are key drivers of retail investor behaviour at the moment, as they exercise a degree of caution in the wake of uncertainty, but come November, the election outcome could be a defining moment for the market,” said Carl Hazeley, chief analyst at Finimize. A massive 79 per cent of retail investors expect further interest rate cuts this year, as does the wider market, and 52 per cent said they plan to increase their investments when further cuts come, which could mean an uptick in investment at the end of the year. In fact, over a third (39 per cent) of retail investors are trimming expenses in other areas, like luxuries and sav.