Investor sentiment has dropped to its lowest level for 2017, a month after the result of the UK's general election.

UK investor sentiment has dropped to its lowest level this year, falling by 3.7 per cent to 2.59 per cent in July, according to the Lloyds Bank Investor Sentiment Index.

However, the index showed overall sentiment is up 7.34 per cent since July last year, when it hit record lows immediately following Britain’s decision to leave the European Union.

Around eight out of 11 asset classes saw a fall in sentiment in July. UK equities were the biggest faller with a 10.75 per cent decline, falling from 13.5 per cent to 2.75 per cent. This drop happened in the period following the UK general election and the start of Brexit negotiations between the UK and the EU.

UK bonds were the second biggest faller dropping 8.72 per cent from -1.05 per cent to -9.77 per cent.

Despite a decrease in overall investor confidence in July, Japanese equities and commodities did see a minor upturn in popularity with an increase of 0.59 per cent.

“After the highs come the lows, and it appears that investors are feeling less confident following the UK general election,” said Markus Stadlmann, chief investment officer at Lloyds Private Banking. “In May, we saw investor sentiment reaching levels not recorded since April 2016, but this month’s sharp decline – particularly towards UK assets – suggests that the election outcome and ensuing political dynamics have caused uncertainty in the markets.”

Stadlmann added: “A reversal of bond market trends wasn't helpful either. In the UK and elsewhere, markets have been very sensitive to perceived changes in communication by monetary policy makers. Whilst we do not expect the end of asset purchases by central banks alone to cause an unmanageable fall in bond prices, investors are rightly concerned. There are several other factors to consider when assessing the future development of global sovereign bond yields, most importantly the growth and inflation outlook, as well as financing requirements. When looking closely at these factors, none of them makes the fixed interest outlook any brighter.”