Source: Jin10 Data
The US stock market is seen as the biggest beneficiary of the reconfiguration of the $6.1 trillion currency market fund, and investor optimism remains at its highest level since November 2021.
According to a survey by Bank of America, global investors may continue to inject funds into US stocks reaching record high levels.
When asked which asset class would benefit most from the reallocation of money market funds, 32% of respondents chose US stocks. Another 19% said that a large amount of cash would be invested in global equities, and one quarter of respondents said they would buy government bonds.
The survey, conducted from June 7th to 13th, included 206 participants who manage assets of up to $640 billion. The survey shows that investors' optimism remains at its highest level since November 2021, while cash levels in money market funds are at their lowest in three years. According to data compiled by Bloomberg, money market funds currently have about $6.1 trillion in assets.
According to the survey, there is a bullish sentiment.$Microsoft (MSFT.US)$ and $NVIDIA (NVDA.US)$The proportion of the so-called seven big technology giants such as Nvidia trading at high valuations has now reached 69%, which is one of the most singular and crowded trades in history.
Driven by the AI boom and the optimistic outlook for the Fed to cut interest rates due to slowing inflation, US stocks have risen to historic highs. Bloomberg data shows that this year,$S&P 500 Index (.SPX.US)$up 15%, pushing the benchmark index's forward P/E ratio to 21, well above the long-term average of 16.
Nevertheless, high valuations have not stopped a range of Wall Street investment banks such as Citigroup and Goldman Sachs from being more bullish on the prospects for the S&P 500 index.
Bank of America's survey shows that 41% of fund managers expect large-cap growth stocks to continue to drive US stock market gains. Bloomberg data shows that nearly three-quarters of this year's gains in the S&P 500 index came from large-cap technology stocks, with only Nvidia contributing 34% of the gains.
Meanwhile, in Europe, French stocks have become the least popular in Europe due to recent political turmoil in France.
According to Bank of America's latest survey of fund managers in the region, there is a greater likelihood that investors will reduce their holdings of French stocks than any other stock in Europe over the next 12 months, which is in stark contrast to May when France was their top pick. Now, on the contrary, investors' preferences have shifted to more defensive stocks and sectors.
Bank of America's survey period (June 7-13) covered most of the decline in the French stock market last week. The CAC 40 index fell the most in more than two years last week, wiping out all its gains for 2024, with a market capitalization loss of $258 billion, as investors worried about the prospect of Macron-led centrist and pro-business La Republique en Marche (LREM) party losing more ground in the two-round parliamentary elections on June 30 and July 7.
The CAC 40 index rebounded slightly on Monday as traders weighed promises from far-right leader Le Pen that she would work with Macron if elected. French government bonds edged higher at the open on Tuesday, outperforming their German counterparts slightly. The yield spread between 10-year French and German bonds is around 77 basis points, slightly lower than the 12-year high of more than 80 basis points briefly touched on Monday.
However, the risks from political turmoil in France remain the top concern for European investors, prompting Citigroup strategists to downgrade their overall rating for Europe to neutral. Bank of America's survey shows that investors' optimism about the prospect of further gains in European stock markets this month has diminished. From a global perspective, European stocks are still favored. In its survey, more investors are bullish on European stocks than US stocks.
Barclays strategists, however, expect the performance of European stocks to remain "unstable" before the second round of voting in the French election due to the diversity of potential results. They said that investors' concerns include the possibility of political instability, which could lead to an ungovernable France, and the risk that the government may find it difficult to pass any meaningful legislation to improve public finances.
Editor/tolk