The traditional monthly survey of Bank of America (Bofa) shows the Great optimism of fund managers on Europedespite political uncertainties, not only around the resolution of war in Ukraine. They highlight a stronger growth in the next twelve months, with a majority that considers the German fiscal stimulus as the most likely catalyst, followed by the flexibility of the European Central Bank (ECB).
Specifically, 45% net of respondents expect a stronger European growth in the next twelve monthscompared to only the 9% that bet on the previous survey, being also the highest level since May of last year. Besides, 59% net expects lower inflation in Europewhile only 4% net projects lower inflation worldwide, the lowest reading in two years.
On the other hand, Bofa’s survey shows that optimism about world growth is more moderate: 2% net projects that global growth will slow down in the next twelve monthssimilar to the record last month, with a majority of 52% that sees a soft landing as the most likely result for the world economy, while 36% expect a non -landing and 6% sees a forced landing. In this regard, 45% anticipate that the Trump administration will have a positive net impact on world growth, compared to almost 60% last month. 55% expect US policies to lead to greater inflation, and 4% net see a bullish potential for 10 -year bond yields, only the second positive reading since October 2022. Regarding Trump management, 39% consider that commercial war is the greatest risk for marketsin terms of ability to unleash a recession, followed by the increases in Fed’s interest rates, with 31% in case inflation requires it, while 13% already warns that there is a risk of Bubble of artificial intelligence (AI).
MARKETS: They expect more profits from Europe
As for the markets, 66% net of the participants expects more short -term profits for the European Variable Income from its current historical maximum (compared to 44% of the previous month) and 76% net projects a bullish potential for the next twelve months (compared to the previous 56%), with a plurality of investors waiting The benefits. Besides, A diversity of investors expect Europe to be the variable rental market with better worldwide yield this yearwith 12% net who claims to be over-being in European Variable Income in a global context, while in December 25% net they say that it is infraded.
Regarding the financial sector, The survey states that banks are the most popular sector, while small capitalization companies remain little beloved. Thus, in 28% net of respondents sees a greater bullish potential for European cyclicals against defensive, compared to 12% last month, but that cyclical optimism does not extend to small capitalization companies, since 14% Neto expects small capitalization companies to have a lower performance than those of large capitalization, the most pessimistic reading of the last six months.
Therefore, the banks have exchanged their place with the insurance to become the most over-popular sector in Europe for the first time since July 2023. A great disparity of respondents anticipates that the financial sector will be the one that will best behave in Europe This year. The cyclical sectors continue to dominate the infra-powers, being retail and the least preferred car. Germany remains the preferred Variable Income Market in Europe, while Switzerland is the least appreciated.
The survey also indicated that 40% of the fund managers are committed to the fact that in 2025 the rates that register the best performance are the Stoxx 50 and the Nasdaq 100: 22% bet on the euro Stoxx 50, while another 18% say that the best index will be NASDAQ 100 and another 18% think it will be the Hang Seng and 17% consider that the best index will be the Russell 2000, while that 11% opt for the Nikkei 225. By asset classes, 34% of managers bet on global actions, which represents a 13 percentage points against the survey developed in January. In second position is gold, that 18% of the managers consider that it will be the best asset, while another 18% committed to US actions.
The scenario against an eventual total commercial war
In the event that a total trade war occurs, 58% committed to gold as an asset with better performance in 2025, while another 15% indicates the dollar and 9% to the debt to 30 years of the US. In this scenario, only 2% would bet on actions. In any case, 89% of the managers consider that the actions are overvalued, the greatest data of the entire historical series, which starts in 2001. In the last ten years, the average of the managers who consider the actions overvalued to the actions has been 81%.
Apparently, the result of Bofa’s survey is no stranger to the spirit of one of the Wall Street giants, such as Goldman Sachs that, like several analysts, consider that a peace agreement, regardless of the terms of it, would be Very positive for European Variable Income. Goldman in one of his latest reports, go to the European Stoxx 600 recovering land against S&P 500 and MSCI World, with which he has had a lower performance of 13% and 6%, respectively, from the outbreak of the conflict in February 2022. The US investment bank predicts that Stoxx 600 rises 4.7%, up to 580 points in the next twelve months, Faced with its previous 540 objective. Goldman also expects the United Kingdom FTSE 100 to increase 2.7%, to 9,000 points, during the year, above its previous objective of 8,600.
Source: Ambito
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