Global Stock Market Bullish Sentiment Hits 7-Month High  

 

Recently, Bank of America strategist Michael Hartnett stated that global stock markets are poised for further gains, as the proportion of fund managers bullish on stocks has climbed to a seven-month high amid significantly improved global growth expectations.  

Bullish Sentiment Rises to 7-Month Peak  

The bank’s latest survey shows that a net 28% of global fund managers are optimistic about stocks, the highest level since February this year.  

 

The survey, conducted from September 5 to 11, polled 165 fund managers managing a total of $260 billion in assets.  

 

Hartnett noted that investors’ outlook on global growth has seen the most notable improvement in nearly a year, with only a net 16% now expecting an economic recession.  

 

In his report, Hartnett wrote that with the risks of a “recessionary trade war” fading, a “bullish army” has surged into the stock market.  

 

Currently, the MSCI All-Country World Index has hit an all-time high, driven largely by sustained market enthusiasm for AI, which has boosted tech giants’ stock prices, and the impact of US “reciprocal” tariffs being less severe than anticipated.  

 

Additionally, investors expect the Federal Reserve to timely begin lowering interest rates to avert a US economic downturn.  

 

The Fed will announce its September interest rate decision in the early hours of Thursday Beijing time. Swap markets have fully priced in a 25-basis-point cut, and in Bank of America’s survey, nearly half of respondents expect at least four or more rate cuts within the next 12 months.  

Concerns Over Fed Independence  

Moreover, about 26% of surveyed individuals cited a second wave of US inflation as the biggest tail risk, while 24% expressed concerns about a weakening of the Federal Reserve’s independence and potential dollar depreciation.  

 

Recently, strategists from JPMorgan and Goldman Sachs have warned that Trump’s increasing pressure on the Fed to cut rates, along with his move to fire Fed Governor Lisa Cook, has begun to raise investor concerns about the Fed’s independence.  

 

Nevertheless, overall, respondents remain optimistic about further US stock market gains by year-end, buoyed by strong corporate earnings performance. In the Bank of America survey, about half of participants noted that AI has improved productivity.  

 

The survey also revealed that the most popular trade among global fund managers remains going long on the “Magnificent Seven”—with about 42% of fund managers choosing this strategy. Additionally, 25% of respondents are long on gold, 14% are short on the dollar, and 9% are long on cryptocurrencies.