Investors 'most bullish' since Nov 2021 on rate cut expectations: Survey

The survey of global fund managers with $562 billion in asset under management found 82% expect the first rate cut by the Federal Reserve in the second half

Expectations over interest rate cuts rather than earnings optimism has made investors the "most bullish" since November 2021, Bank of America's monthly fund manager survey for May showed on Tuesday.
 

The survey of global fund managers with $562 billion in asset under management found 82 per cent expect the first rate cut by the Federal Reserve in the second half, while 78 per cent say a recession is unlikely over the next 12 months.
 

The survey showed cash levels fell to a three-year low of 4 per cent from 4.2 per cent the previous months and stock allocation reached its highest since January 2022, a dynamic that typically reflects strong investor confidence.
 

However, expectations for global growth fell for the first time since November, with a net 9 per cent expecting a weaker economy over the next 12 months, compared with 11 per cent that expected a stronger economy in the last survey in April.
 

That said, most investors do not expect recession.
 

"On the global economy, 78 per cent of FMS (fund manager survey) investors say a recession is 'unlikely' within the next 12 months, in line with last month's expectations," BofA said.
 

"For the fourth month in a row, a greater share of FMS investors see a global recession as 'unlikely' (78 per cent) than 'likely' (22 per cent)," the bank said.
 

In terms of crowded trades, the survey showed participants still believe "long Magnificent Seven" is the most crowded - referring to the seven most valuable US companies, a group that includes Apple, Microsoft and Amazon.
 

"Long US dollar" was the second most-crowded trade, overtaking "short Chinese equities", the survey showed.