Investors are becoming more bearish as expectations of a recession accelerate: At least that’s the sentiment resonating from Goldman Global Markets Division’s latest Marquee QuickPoll survey of nearly 1,200 participants. Key findings include:
While investor bearishness hit a new low in April - coming in below early February and March levels in 2020 - Oscar Ostlund, head of content for Marquee suspects investor positioning and sentiment could point to an increased likelihood of the market snapping back for a rally.
While sustaining this level of bearishness would likely require a continuous flow of bad news or additional hawkishness from the Fed, the latter, notes Ostlund appears unlikely.
While two-thirds of International investors expect a recession before the end of 2023, up from 56% in April, there’s been a corresponding acceleration in when they expect inflation to fall back below 3%.
Alarmingly, results suggest that investors see a recession as a necessary evil for inflation to self-correct (a la normalise).
After experiencing a brutal sell-off, the vast majority of institutional investors (62%) foresee the sector falling by another 10%, while a much smaller cohort (14%) believe the sector has already hit bottom.
At face value, Australia is nowhere near entering a bear market, well... not if brokers' recommendations during reporting season were anything to go by.
For example, while Buy recommendations peaked above 60% of all recommendations, Sell ratings at 5% were at the lowest level in 16 years.
However, what’s worth remembering is that reporting season effectively wound down, three days before Russia invaded Ukraine on 24 February.
Since then the war impact is difficult to ignore with the market experiencing numerous sharp sell-offs in the last four months.
But that only tells half the story, with the market also experiencing sharp recovery rallies over that time as well.
So where did all that volatility lead us to? The short answer is we’re back pretty much where we started with the ASX/S&P 200 today posting a 12-month return of 0.56%.
But before you brush off your voovoo zela and blow loudly – the sound of abject misery – you can take some solace in knowing the ASX has, believe it or not, outperformed most of its peers globally.
Global equities, as per the S&P Global BMI proxy is down -5.37% for the year.
Beyond the four stocks mentioned in today’s article on four cheap stocks, the local market is awash with stocks trading well below any number of metrics you choose to evaluate them by.
It’s worth kicking the tyres on a growing cluster of stocks that may have, due to no fault of their own, been unfairly oversold in the last 12 months, including:
EML Payments (ASX: EML): Down -73.21%
Platinum Asset Management (ASX: PTM): Down -62.81%
Life360 (ASX: 360): Down -41.67
Domino's Pizza (ASX: DMP): Down -35.85%
City Chic Collective (ASX: CCX): Down -45.66%
Australian Ethical Investment (ASX: AEF): Down -41.86%
United Malt Group (ASX: UMG): Down -13.45%
ASX/S&P200 Index over one year.
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