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(Bloomberg) — Investors are likely to be forced to chase the stock rally sparked by the US-China trade truce after mostly missing out on last month’s rebound, Bank of America Corp. strategists said.
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A survey by the bank conducted before the trade talks in Geneva showed fund managers were a net 38% underweight on US stocks, the most in two years. Exposure to the dollar was the lowest since 2006, with about 40% of respondents looking to increase hedges against declines in the US currency.
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The poll is “bearish enough to suggest pain trade modestly higher” given the US-China deal would prevent a recession or a shock in credit markets, strategist Michael Hartnett wrote in a note.
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He added that a “no landing” scenario where the economy avoids a downturn would be most positive for US stocks, emerging markets, small caps and energy. It would have the most negative impact on gold.
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US equities have badly trailed international peers this year as President Donald Trump’s trade war sent investors looking for cheaper and more stable alternatives. European stocks, for instance, have benefited with the Stoxx 600 Index up 7.5% in 2025.
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The S&P 500, which had slumped as much as 19% from its record high in February, has bounced back in the past month, and rallied further on Monday after Washington and Beijing agreed to temporarily cut tariffs on each other’s products. Following its latest 3.3% surge, the index is close to recouping all declines for the year.
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BofA’s global survey was conducted from May 2 to May 8, and canvassed 174 participants with $458 billion in assets under management.
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—With assistance from Michael Msika.
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English (US)