Investors are more optimistic than they have been in more than four years in October, causing investors to flock into equities and dump bonds, Bank of America's monthly global fund manager survey shows. Geopolitics remains the biggest tail risk, while most investors don't expect an increase in hedging activity in the run-up to U.S. elections. The following is a selection of the survey's findings.

Investors Turn More Optimistic on European Equities, BofA Survey Shows

1515 GMT - More investors are optimistic about the performance of European equities than they were in September, Bank of America's European fund manager survey for October show. A net 18% of investors expect European equities to rise in the near term, compared to a net 20% of investors who in September expected a decline in European equities, the survey shows. "A net 58% project upside [in European equities] over the coming twelve months (up from 43%)," BofA says. (miriam.mukuru@wsj.com)

China Stimulus Likely to Boost Emerging-Market Stocks, Dent Bonds: BofA Survey

1329 GMT - The biggest winners from China's stimulus announcements are emerging market stocks and commodities, while the biggest losers are government bonds and Japanese equities, according to investors polled in the Bank of America's October global fund manager survey. The survey shows 47% of investors see emerging-market stocks as the biggest beneficiary of China stimulus, followed by commodities at 41%, and the dollar and European equities both at 10%. For the biggest losers, 41% of investors pointed to governments bonds, 33% said Japanese equities, 14% said gold, and 12% said the S&P 500. (renae.dyer@wsj.com)

'Long Magnificent 7' Is Most Crowded Trade for 19th Month, BofA Survey Says

1326 GMT - Buying 'Magnificent 7' stocks--those of Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla--remains the most crowded trade for the 19th consecutive month at 43%, Bank of America's October global fund manager survey finds. While it remains the most crowded, this factor has come down from 71% in July 2024, it says. 'Long gold' is the most crowded trade for 17% of investors, while 'long China equities' is the most crowded according to 14% of investors surveyed. (emese.bartha@wsj.com)

Investors Favor Corporate Bonds Over Government Bonds, BofA Survey Says

1140 GMT - The Bank of America global fund managers survey for October shows that investors prefer corporate bonds to government bonds. Asked about positioning within their bond allocations, a net 32% of investors surveyed said they were overweight corporate bonds while a net 18% of investors said they were underweight government bonds, the survey shows. (miriam.mukuru@wsj.com)

Geopolitical Conflict is The Biggest Tail Risk, BofA Survey

1125 GMT - Investors see geopolitical conflict as the biggest tail risk--a theoretical event that has a low probability of occuring but could have severe economic consequences--, Bank of America's October global fund manager survey show. A third, or 33%, of investors polled name this as the biggest tail risk, followed by a rise in global inflation at 26%. "Concerns about U.S. recession faded to 19% (from 40%, was the top risk in September)," BofA says. (miriam.mukuru@wsj.com)

Investors Pile Into Equities, Dump Bonds in October, BofA Survey Finds

1114 GMT - Allocation into equities surges in October, marking the biggest jump since June 2020, while bond allocation drops by its largest amount on record, Bank of America's October global fund manager survey says. Fund managers' equity allocation was a net 31% overweight in the survey, up 20 percentage points month-on-month, the survey shows. Meanwhile, bond allocation was a net 15% underweight, collapsing by 26 percentage points and marking the biggest month-on-month decline recorded in BofA's survey. (emese.bartha@wsj.com)

U.S. Election Sweep Would Hit Stocks, Lift Bond Yields; Dollar Impact Uncertain: BofA Survey

0955 GMT - Investors expect a U.S. presidential election sweep for the Republicans or Democrats would result in lower stocks and higher bond yields but are somewhat split on the dollar impact, according to Bank of America's October global fund manager survey. A sweep, where either party wins the White House and Congress, is considered negative for the S&P 500 by 47% of investors compared to 28% of respondents who view it as positive for stocks. Some 66% of investors think a sweep would result in higher bond yields while just 12% expect lower yields. Investors are more divided on the dollar impact, with 43% expecting a higher dollar and 35% expecting a lower currency. (renae.dyer@wsj.com)

Investors Expect Yield Curves to Steepen in 2025, BofA Survey Says

0921 GMT - Investors overwhelmingly anticipate yield curve steepening--when the gap between short- and long-dated yields widen--in 2025 as interest rates fall, Bank of America's October global fund manager survey says. Out of the respondents, 85% anticipate steeper bond curves next year, near the record of 90% reached in the September survey, it says. (emese.bartha@wsj.com)

Most Investors Expect Normal Hedging Activity Ahead of U.S. Elections, BofA Survey Says

0918 GMT - Hedging activity might be slightly higher than usual in the run-up to the U.S. election, according to one quarter of respondents in Bank of America's October global fund manager survey, but more than half of investors expects it to be normal. Hedging activity is likely to be "a little higher than normal" in the lead-up to the lead-up to the November election, according to 25% of respondents, the survey says. Slightly more than half, 52% of respondents, expect normal hedging activity in the weeks before the elections. (emese.bartha@wsj.com)

Most Investors Expect U.S. Soft Landing in BofA Survey

0917 GMT - Most investors continue to expect the U.S. economy to experience a soft landing where the Federal Reserve is able to bring down inflation without causing a significant economic slowdown or recession, Bank of America's latest global fund manager survey shows. Some 76% of investors expect a soft landing in the October survey, compared to 79% in the September survey. A no landing, where the economy continues growing enough to keep inflation elevated and limit the Federal Reserve's scope to cut interest rates, is considered the main alterative scenario at 14%, up from 7% in September. The proportion of investors expecting a hard landing, or a marked economic slowdown, is at 8%, down from 11% in the previous month. (renae.dyer@wsj.com)

Investor Optimism at More Than 4-Year High, BofA Survey Says

0903 GMT - Investors are more optimistic than at any point since June 2020 due to China's stimulus program and expectations of a soft landing for the economy, Bank of America's October global fund manager survey finds. BofA's survey's broadest 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 rise since June 2020," it says. Cash levels fell to 3.9%, the lowest level since February 2021, from 4.2%, while growth expectations showed the biggest jump since May 2020, to minus 10% from minus 42%, the survey finds. (emese.bartha@wsj.com)

(END) Dow Jones Newswires

October 16, 2024 11:28 ET (15:28 GMT)

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