LONDON (Reuters) -Traders elevated their allocations to money and diminished their obese place in shares in August, as expectations for world progress dropped to their lowest in eight months, a BofA survey of fund mangers printed Tuesday confirmed.
Based on the survey, 31% of respondents mentioned they have been obese in shares in August, down from 51% in July, whereas their common money degree was 4.3% of their belongings underneath administration, up from 4.1% a month earlier than.
BofA attributed the shift to weak U.S. payrolls information for July, and the volatility shock related to the rebound within the Japanese yen.
The S&P 500 is down 3.6% to date this month. It tumbled 2.7% on the day of the payrolls report and an extra 2% the next session, after Japan’s Nikkei share index fell by its most in a day since 1987.
Market gamers have additionally pointed to the rebound within the yen and the ensuing wind-down of carry trades utilized by buyers to juice their bets, as being behind the dump.
Shares around the globe have been rebounding in latest periods, nevertheless.
BofA mentioned 189 members with $508 billion of belongings underneath administration responded to the survey, and a web 47% of survey respondents count on a weaker world economic system within the subsequent 12 months, down 20 share factors from July.
Nevertheless, 76% of respondents to the survey mentioned they nonetheless count on a “gentle touchdown” for the worldwide economic system, referring to a gradual slowdown versus a extra dramatic “laborious touchdown” or a “no touchdown” state of affairs by which progress doesn’t sluggish in any respect.
This conviction “is pushed by expectations for decrease rates of interest,” BofA mentioned, as 93% of respondents count on short-term charges to be decrease in 12 months’ time, the very best up to now 24 years.
The survey discovered 60% of respondents count on 4 or extra charge cuts from the U.S. Federal Reserve over the subsequent 12 months.
Allocation to Japanese equities noticed the biggest one-month drop since April 16. Traders moved from a web 7% obese in July to a web 9% underweight in August, the primary web underweight since July 2023.
(Reporting by Alun John; enhancing by Dhara Ranasinghe and Sharon Singleton)