Following the Fed’s rate cut and expectations of a soft landing in the US economy, investors increased their positive forecasts for equities.
The optimism of global investors recorded its largest increase since June 2020 in October due to the Federal Reserve rate cuts, China’s stimulus promises and expectations of a soft landing american economy, showed a BofA survey of fund managers published on Tuesday.
Cash allocations fell to 3.9% from 4.2% in September, while equity allocations rose to a net overweight of 31%, and bond allocations suffered a record drop to a net underweight. 15%, according to the survey.
“Our broader measure of (fund manager) sentiment, based on cash levels, equity allocation and economic growth expectations, “rose from 3.8 to 5.6, its largest monthly increase since June 2020”said BofA.
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The survey showed that Investors expect the upcoming US election to be most likely to affect trade policy (47%), followed by geopolitics (15%) and taxation (11%).
Regarding the positioning of investors regarding the soft landing, the survey showed the biggest increase in allocation to global equities since June 2020.
Bank of america.PNG
World stock index headed for sixth monthly rise
However, the sharp drop in cash levels has triggered the first contrary “sell signal” since last June, according to the bank’s own metrics.
“Since 2011, there have been 11 previous ‘sell’ signals that saw global equity returns (ACWI) of -2.5% in the month after and -0.8% in the three months after the activation of the ‘sell’ signal,” says the bank, referring to the behavior ofhe MSCI world equity index, which has risen 0.6% so far in October, heading for its sixth monthly increase.
The survey, conducted between October 4 and 10, involved 231 experts with $574 billion in assets under management.
Source: Ambito
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