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Investors sweat over inflation, interest rates: Survey

The latest data from Investment Trends shows yield expectations among equities investors are at a 15-month low and concerns over rising inflation and likely increases to interest rates are growing.

A survey of active investors in March reveals greater optimism for the Australian stock market than in previous months, with their outlook largely in lock step with the All Ordinaries Index since the beginning of the COVID-19 pandemic, Investment Trends said.

"Overall, investors tend to be reactive in their outlook, so are more likely to have a negative outlook in the aftermath of a sell-off," Investment Trends head of research Irene Guimatsia said.

"For example, in January 2022 33% saw red following the short-lived sell-off originating from the US as markets offered a knee-jerk reaction to the December inflation figures. The situation has significantly improved to a current split of 58% rise versus 24% decline, as at March 2022."

However, in March, yield expectations hit a 15-month low, coming in at 3.9%. This is down from 4.1% in February and 4.3% in November last year.

Guimatsia said there are a few variables at play that are impacting investors' outlooks.

For instance, when asked what their biggest concerns are, inflation ranked third among investors. The stability of the global economy and national security remain their biggest concerns.

The prospect of rising interest rates is also of increasing concern, Guimatsia said.

Note, this survey was undertaken prior to the release of the latest CPI data by the Australian Bureau of Statistics which saw a quarterly increase of 2.1% and annual increase of 5.1%.

Read more: USInvestment TrendsIrene GuimatsiaAll Ordinaries IndexAustralian Bureau of StatisticsCPI