This is the first time Lloyds Private Bank's investor confidence index has risen for two consecutive months in over a year.

November saw UK investor confidence increase for the second month in a row, according to a monthly snapshot by Lloyds Private Bank, with overall sentiment once again on a positive trajectory (up 0.53 per cent from October to 4.81 per cent).

This improvement in confidence is the first back-to-back monthly uplift in more than a year, and longer-term confidence has doubled in twelve months (from 2.19 per cent to 4.81 per cent).This month’s continued rise in optimism mirrors better-than-expected UK growth forecasts, which may be giving investors a more positive outlook.

Monthly winners
The biggest winner for November is Japanese shares, which rose 5.2 per cent in performance and confidence rose 8.26 per cent to 12.48 per cent this month. This asset class hasn’t seen confidence of this level in nearly four years (12.62 per cent in January 2014). The latest uplift in investor confidence coincides with a steady improvement in performance over the last year of 24.6 per cent.

While October was a month to forget for UK asset classes, this month saw a resurgence in investor confidence for UK shares, which rose to 4.45 per cent (up 3.94 per cent). This increase follows a two month dip.

Investors increasingly optimistic
The surge in investor confidence is reflected in the asset class performance of gold this month which fell one per cent. Increasingly, optimistic investors have moved away from the safety appeal of gold, making it November’s biggest loser, seeing sentiment dropping 6.63 per cent from 44.39 per cent to 37.76 per cent. Despite the dip, gold is still the asset of choice of cautious investors.

Eurozone shares stuttered this month, suffering a 3.58 per cent dip in investor confidence to become the month’s second biggest loser (-9.78 per cent overall). This is despite their performance continuing to see modest improvement of 0.9 per cent on the previous month.

Over the longer term, eurozone shares (up 29.6 per cent) alongside emerging market shares (up 24.9 per cent) which have both been the best performers over the last 12 months.

UK property (down 1.90 per cent), UK corporate bonds (down 1.60 per cent) and UK government bonds (down 0.90 per cent), all continuing in November to show little or no growth, as they have over the last three months.

“This month’s main message? Cautious optimism. There are a few bright signals coming through which suggest the final quarter of 2017 could be a memorable one, and for the right reasons,” said Markus Stadlmann, chief investment officer at Lloyds Private Bank. “It seems I may have been struck by a case of ‘commentator’s curse’ when it comes to eurozone equities! Last month I was singing their praises after an incredible 12-month turnaround, but this month we see another small dip in popularity. Nonetheless, we remain a fan and expect strong regional profit growth to continue leading to higher share prices. 

Stadlmann added: “It’s no surprise to see Japanese equities attracting positive attention, although our team has slightly cooled on them recently as we believe future performance may be weaker than we initially thought. That said, we still expect Japanese equities to outperform other stock markets in the near future. With holiday season nearly upon us, we wait to see if investors can end the year on a high. More than anything else sentiment will depend on the geopolitical environment on both sides of the pond with Brexit and US tax plans being key themes influencing financial markets and whether they end the year on a high or a low.”