Saxo Bank has conducted another survey among its clients, this time checking their mood for the last quarter of the year.
The study revealed a waning confidence in global markets among investors. Despite optimism among many respondents, rising concerns about inflation, interest rates, and geopolitical risks shape market expectations for the coming months.
Sentiments in the equity market are deteriorate and the number of those expecting significant profits is decreasing
The Q4 2024 survey revealed a drop in optimism towards global stock markets compared to Q3. A significant portion of respondents (40.6%) predict increases in the markets, while in previous quarters it was respectively 42.1% in Q3 and 50.5% in Q2. This investor caution reflects increasing uncertainty about economic conditions, with geopolitical tensions and inflation at the top of the list of concerns.
Extreme responses suggest an increase in uncertainty and doubts
Interestingly, the number of respondents holding extreme positions (i.e., predicting a significant increase or decrease) has increased significantly compared to the previous quarter when only 1.5% predicted a significant increase and this percentage stood at 5.6% this quarter. Meanwhile, 2.4% expected a significant decline in Q3, and now more than three times more – 8.4% – predict such a scenario.
“We are seeing a greater divergence in client beliefs about the markets, which is understandable given the increase in geopolitical risk and the upcoming US elections in November,” says Peter Garnry, Saxo’s Chief Investment Strategist.
Younger generations more optimistic
As we have already noted in the previous survey, younger generations of investors show a higher level of optimism compared to older ones. In the age group of 18-35 years, more than half of respondents expect an increase or significant increase in the coming quarter.
Geopolitical tensions, US elections, and interest rates top investor concerns
With growing anxieties around the world, geopolitical tensions have become the largest concern for investors. Similarly, as in the previous quarter, the US elections and interest rates occupy the next places on the list of concerns.
“Continuing concerns about geopolitical tensions are related to ongoing global conflicts and economic sanctions. At the same time, rising interest rates and inflation remain significant threats to global markets. The upcoming US elections, which will take place in less than a month, can also significantly influence them,” adds Garnry.
Sector forecasts: IT and healthcare leading
Saxo’s clients still perceive the technology, energy, and healthcare sectors as those that will perform the best. Technology enjoys the highest trust – 20.6% of respondents believe that it will do the best this quarter. 11.5% of those surveyed pointed to the energy sector, while healthcare – 10.1%.
“Although the IT sector still dominates this survey, we see that its result has dropped significantly compared to the previous two quarters when it was over 30%. Probably, this was contributed by the weak US technology stock results in the past three months. Equally surprising is the low belief in the public utility sector, which outperformed over the last three months,” notes Garnry.
Investors’ uncertainty toward Europe
The majority of respondents, when asked about the region that will do the best in the fourth quarter, pointed to North America (49.3%) – just like in the last two periods. Europe was considered the most poorly promising region – as many as 47% of respondents predict that it will perform the worst in the last quarter of 2024. Interestingly, this trend has remained throughout the entire study period.
“The classic narrative of American exceptionalism seems to remain strong, despite growing concerns about the US budget or the upcoming elections. Analyzing this year’s S & P 500 indices in the US and EUROSTOXX 600 in Europe, American companies achieved almost three times higher returns than European ones. Time will show whether this trend will continue in the quarter when the whole world focuses on the US,” Garnry adds.
About the study:
The aim of the study was to gain insight into Saxo’s clients’ expectations for the upcoming quarter. The survey was conducted on September 23, 2024 – October 4, 2024, and covered 712 respondents. It was carried out in English, French, Dutch and Danish markets.
Source: https://managerplus.pl/slabnie-zaufanie-inwestorow-do-rynkow-skrajne-oczekiwania-w-czasach-niepewnosci-51405
