Fund managers are at their "most bullish" since February, with cash levels low and optimism around the global economic outlook growing, according to BofA.
Citing their survey of global fund managers for September, the bank’s analysts led by Michael Hartnett noted that worries that aggressive U.S. trade policies could spark a wider economic downturn are ebbing.
Meanwhile, more than 47% of respondents to the survey are predicting that the Federal Reserve will soon roll out a series of four or more interest rate reductions.
Markets are now all but certain that the U.S. central bank will slash borrowing costs by at least 25 basis points at the end of its latest policy gathering on Wednesday, while there is also an outside chance of a deeper half-point drawdown. Theoretically, slashing rates can help to boost investment and hiring, albeit at the risk of driving up inflationary pressures.
Against this backdrop, growth expectations in the survey have seen their biggest jump since last October -- some two-thirds of respondents are anticipating a so-called "soft landing" as well for the U.S. economy, in which the Fed successfully corrals inflation without sparking a recession.
In terms of asset allocation, the amount of fund managers who are "overweight" global equities is now at a seven-month high, although 58% flagged that stocks -- which have recently crested record highs in the U.S. -- are "overvalued."
Investors have also slashed their long positions on emerging-market and European equities, are covering U.S. shorts, and have added to longs in sectors like tech, banks, and health care, the survey showed.
The comments come as stocks, especially in the U.S., have rebounded following a swoon in early April, when President Donald Trump unveiled his sweeping "reciprocal" tariffs on a host of countries. The benchmark S&P 500 has climbed by more than 12% so far this year, bolstered partially by more clarity around Trump’s trade plans, hopes for impending Fed rate reductions and an ongoing boom in enthusiasm around the potential of artificial intelligence.
Source :
https://www.investing.com/news/stock-market-news/global-fund-managers-at-their-most-bullish-since-february-bofa-survey-shows-4240179
