[ad_1]
The possibility of faster-than-expected rate hikes by the US Federal Reserve (US Fed) has made fund managers cautious on the road ahead for the markets, with those surveyed across the globe by BofA Securities in April expecting 7 hikes by the US central bank (up from 4 hikes earlier). In this backdrop, they suggest selling stocks on a rally in equity markets.
“April fund manager survey (FMS) is bearish as fear of fast & furious Fed sends global growth optimism to all-time low, keeps Wall Street stability risks high; though not as bearish as war-shocked March FMS. We remain in ‘sell-the-rally’ camp as profit-policy set-up means January / February sell-off was an appetizer not main course of 2022,” cautioned Michael Hartnett, chief investment strategist at BofA Securities.
The survey was done between April 1 and 7 and had 329 panelists with $929 billion in assets under management (AUM).
Global growth optimism, according to the survey findings, was at an all-time low, with recession fears surging in the world’s investment community. The quantum of investors expecting the economy to deteriorate is the highest ever at 71 per cent, according to the April survey. Stagflation expectations jumped to the highest since August 2008, while monetary risk increased to a historic high.
Global recession, hawkish central banks, inflation and Russia / Ukraine geopolitical issues were among the top tail risks (in that order) to the markets, BofA Securities said. As a result, a net 35 per cent of FMS investors said they were currently taking lower-than-normal risk levels, down 6 percentage points (ppt) month-on-month (MoM).
A majority of investors (64%) expect the S&P 500 to break below the 4,000 level first before recouping the loss and breaching the 5,000 level (26%). The survey findings show that investors expect a Fed “put” to arrest a stock market sell-off at 3,637 levels for the S&P 500.
That said, the most crowded trade, according to the survey, was going long on oil / commodities, resources and healthcare sectors; while the biggest shorts included bonds and cyclicals such as industrials and discretionary, the BofA Securities note said.
======================
Twitter: @Pun_ditry
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
[ad_2]
Source link