The IC/Confidence Index was beginning to show signs of moving in the right direction - then along came April. The latest score of -33 was a setback for our index, which was unable to build on any of the improvements made in previous months, and fell 10 points.
The chart for the FTSE 100 Index looks a little grim at the moment, dire economic indicators and continuing uncertainties in Europe having taken their toll over the past month. It is not surprising, therefore, that all of the IC/Confidence index factors within the stock market category were registering negative scores for April.
The only factor that posted a positive score for this month was the one for the retail prices index – but even that could only produce +1. It seemed that even the weather was against market confidence as April became the wettest month since records began.
Perhaps there is a pick-me-up on the horizon as the UK gets into celebration mood this summer. The Queen's diamond jubilee along with the Olympic Games should counter the malaise of the country being in a recession. And with interest rates so low, the yields on offer from shares are appealing especially for those looking for income growth.
But a note of caution: last year's Royal Wedding and the extra bank holiday reeked havoc on some of the economic indicators and the jubilee may have the same impact this year.
HOW DOES THE INDEX WORK?
The IC's Confidence Index is the first of its kind to take into account stock market, economic and general 'feel-good' factors. It is calculated using 10 factors, split into four categories:
■ Prices (RPI, oil price);
■ Rates (interest rate levels, unemployment figures);
■ Stock market (UK new share issues and rising shares, and the level of the Dow Jones index);
■ 'Feel-good' (wages, house prices, the sunshine anomaly)
UK indices such as the FTSE 100 have been excluded from the components, but the Dow Jones is included because of its global influence. As for the sunshine factor, it's a proven fact that people feel better when the sun is shining - and this can even influence investment habits. Each factor is separately allotted a score from +5 to -5. The sum of these scores gives the Investors Chronicle Confidence Index level, on a scale from -50 to +50.