17 APR, 2024
By Jose Luis Palmer from RankiaPro Europe
Research by: Andreas Bruckner & Sebastian Raedler, Investment Strategists MLI UK
Bank of America has released its latest Fund Manager Survey, 144 panellists with $319bn assets under management responded to the regional survey carried on by the Bank of America. The report shows that 50% of the investors see a better European growth ahead, reaching its highest level since July 2021.
A net 50% of respondents expect a stronger economy in Europe over the coming twelve months, up from a net 21% last month and the highest since July 2021. That said, a plurality of 36% still think European growth is set to slow in the near term, as the drag from monetary tightening intensifies, though this is down sharply from 83% in January. A net 57% judge monetary policy in Europe to be too restrictive, the highest level since 2008, while 16% think this is the case globally, a seven-month low. 50% of respondents expect US growth to stay robust, helped by a resilient consumer, while 26% think growth will slow in response to tight monetary policy.. 54% think a soft landing is the most likely outcome for the global economy, down from 62% last month, with 36% in the no-landing camp, up from 23% last month.
41% of participants see higher inflation as the biggest tail risk for markets, up from 32% last month, ahead of geopolitics, at 24%. A plurality of 43% think the dominant macro theme over the coming months will be sticky inflation on resilient growth leading to a higher-for-longer rates environment, up from 21% last month. A net 45% still expect global core inflation to decline over the coming year, though this is down from 57% last month and 71% in January. A net 76% think short-term interest rates will decrease, down from an all-time high of 89% in January, while a net 12% think 10-year bond yields will fade, down from a near-record 36% in January.
52% of investors expect further near-term gains for the European market, down from 64% last month, with 79% projecting upside over the coming twelve months, down from 88%. 38% see hawkish central banks as the most likely catalyst for a correction, up from 21%. 52% think equity upside will be driven by earnings upgrades in response to US growth resilience and China easing. A net 26% of investors say they are overweight European equities in a global context, a two-year high. 48% see the productivity boost from AI as fairly priced in the equity market, while 21% think only little of the good news is already in the price and 14% gauge that the AI rally has gone too far.
A plurality of 45% expect further upside for European cyclicals relative to defensives on easing credit conditions and rebounding PMIs (unchanged from last month), while 31% expect value to outperform growth stocks in response to robust growth and sticky inflation, up from 12% last month. Tech has lost the spot as the largest consensus overweight in Europe to energy, which saw a jump in positioning alongside chemicals, banks and mining. Retail, autos and media are the least favourite sectors.
By RankiaPro Europe