HYCM News: The Impact of Rising Interest Rates and Supply Chain Issues on Investing

Giles Coghlan, HYCM Chief Currency Analyst

The Bank of England (BoE) hawks took to the skies last week, as the central bank announced another 0.75 percent interest rate hike. This was the first back-to-back rate rise since 2004 and was prompted by soaring inflation, which is expected to hit 7% in April. This implies one thing for traders and investors: many are terrified of further months of economic turmoil.

With this in mind, HYCM commissioned fresh research to find out what investors thought about current market conditions and their attempts to manage their money. Less than half (43%) felt optimistic about their capacity to recover financially from the epidemic, down 10% from last year's survey.

Investors' trust is eroding 36 percent responded that the BoE's December interest rate rise and the anticipation of further hikes throughout 2022 influenced their approach. But what else influences this investor outlook？

Supply chain issues and omicron troubles: a passing worry？

Throughout 2021, two variables dominated the global investment outlook: Omicron's arrival and escalating supply chain issues. However, HYCM's research shows that these issues aren't always front of the mind for investors.

Rather, just 28% of investors stated Omicron-related concerns made them rethink their approach. The fact that Omicron causes milder symptoms and fewer hospitalizations is not unexpected considering that we look to be over the peak of infections. The loosening of UK government restrictions and the BoE's quantitative tightening presumably gave traders, advisors, and investors more confidence.

Surprisingly, investors typically consider supply chain challenges low on their list of priorities when developing investment plans. Even fewer (26%) indicated supply chain limitations have forced them to modify how they handle their investment portfolio - unexpected news considering that experts predict these challenges to persist well beyond 2022.

Even Apple and Tesla anticipate constraints producing more mayhem at ports, warehouses, and shops. Tesla, for example, is hiking car costs and replacing alternate semiconductors for those in low supply to meet demand.

Those with bigger investment portfolios tend to take supply chain difficulties more seriously - two in five (41%) of those with portfolios above £500,000 took action due to supply chain issues. Traders, advisors, and investors should all keep an eye out for future limits.