BofA: 'Toppy' sentiment to spark stocks rotation

Investor sentiment surged in July to its most bullish since February, driven by the biggest jump in profit optimism in five years and a record surge in risk appetite, Bank of America’s latest global fund manager survey showed.

- DANILO MASONI AMANDA COOPER

Cash levels fell to 3.9% in July, a low that triggered an in-house “sell signal” from the investment bank's strategists.

In a note published yesterday, BofA said the survey showed sentiment was getting somewhat exuberant, or “toppy”, but fund managers’ overweight positioning in stocks was not yet at extreme levels and bond market volatility remained low.

“Greed [is] always much harder to reverse than fear,” the bank's analysts said, adding that investors were more likely to stick to a “summer of hedging and rotation” rather than laying on big short bets or retreating from the market altogether.