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32% of fund managers believe that the European economy will enter a recession, half as many as a month ago

Pessimism falls, since a year ago 95% anticipated a recession.

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32% of fund managers believe that the European economy will enter a recession, half as many as a month ago

Pessimism falls, since a year ago 95% anticipated a recession


32% of European fund managers surveyed by Bank of America (BofA) believe that the economy of the Old Continent will enter a recession in the next twelve months, a figure that is practically half compared to the 61% who considered it this way a month ago and very far from the 95% who expected this contraction in the survey almost a year ago.

Along the same lines, those surveyed who expect a global recession stand at 14% after months of decline since last November's peak, when 77% of managers predicted it.

However, this month's survey has found that doubts persist about the growth rates of the European economy, since 89% of managers are betting on a greater slowdown as a result of the tightening of monetary policy.

For its part, for the United States, 37% of those surveyed expect growth to resist in the short term, but ultimately it will also be affected by monetary adjustment.

As for China, almost half of managers believe the Asian giant's growth will soften further, while only 13% expect a stronger boost.

The number of managers who expect global core inflation to decline over the next year has dropped to 69% from 81% a month ago, while 40% consider high prices to be the biggest risk. for the markets.

The majority of them, up to 60%, consider that the Federal Reserve (Fed) has ended the rate hike cycle, while 15% think that global monetary policy is too tight, the highest level since 2008.

In that sense, almost 70% of those questioned believe that interest rates will fall in the next year.

63% of managers have a bearish feeling regarding European stocks in the coming months due to monetary tightening (with the added incentive that the European Central Bank meets this week), although practically the same percentage projects profits by 2024.

When explaining this stock market correction scenario, 37% of those surveyed consider that it will occur mainly due to the reduction in business profits, followed by the macroeconomic slowdown, with 29%.

All in all, 32% of managers say they have not taken out any protection against a sharp drop in equities, the highest proportion since November 2021.

The London stock market continues to be the favorite of the managers, followed by the French stock, while the detachment to the Frankfurt, Milan and Madrid stock markets increases.

Regarding the preference for sectors in Europe, 53% of managers observe disadvantages in European cyclical stocks compared to defensive ones due to the economic slowdown, which has resulted in the pharmaceutical sector becoming the most overweight, since which technology has lost, while public services have jumped to third position.

On the other hand, on the underweight side are cyclical sectors such as automobiles, followed by retail and chemicals, while banking is once again underweight for the first time since last June.