Investor behaviour mirroring post covid-vaccine surge

INVESTOR BEHAVIOUR MIRRORING POST COVID-VACCINE SURGE

Investors bought a lot of stocks in July, we know that, just look at the price moves, particularly in the U.S., but data from State Street shows just how aggressive the buying of risk has been, and that it is reaching worrying levels.

By their analysis of their over $4 trillion of assets in custody and administration, investor risk appetite is at its highest since November 2020, the month Covid vaccines were discovered.

Looking purely at equity allocations, they are near their highest levels in 25 years, and have been only higher were during the dot-com bubble and the global financial crisis.

"This suggests that investors believe the peak of uncertainty, whether geopolitical or policy-related, has passed," says Michael Metcalfe, Head of Macro Research, State Street Markets.

"However," he adds, "the stark contrast between their confidence and the ongoing decline in business confidence, especially in the US, is concerning."

"Today's buoyant sentiment could be vulnerable to shocks."

(Alun John)

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