BofA warns that the stock market is overly optimistic, pointing out that the risk premium has fallen to a 20-year low.
BofA warns that the stock market may be overly optimistic after the risk premium fell to its lowest level in 20 years, reflecting increased confidence in the global economy, even though risks remain heightened from energy and geopolitical factors.
April 20, 2569 at 16.36:XNUMX, Bloomberg reported that Sebastian Raedler, Head of European Equity Strategy at Bank of America Corp. Come out to warn that Global stock markets may be underestimating the risks amid increasing global economic vulnerabilities, particularly from disruptions to energy supply.
Raedler believes that investors are becoming desensitized to bad news, as over the past four years, despite several market-shaking events, the global economy has continued to grow, leading the market to interpret macroeconomic risk as very low. What the market is reflecting. คือ The belief is that there is a 90% chance. The current situation will not affect global economic growth. However, he disagreed, pointing out that the risk of an economic slowdown was increasing.
Raedler cited historical data showing that "energy shocks" often lead to demand destruction if not resolved quickly, citing the example of the significant decline in the global Purchasing Managers' Index (PMI) in March, which the market viewed as only a short-term sentiment boost.
These comments come as European stock markets begin to slow after four weeks of consecutive gains, while US futures markets signal that the S&P 500 Index may fall from its all-time high amid concerns that escalating US-Iran tensions could fuel inflation and impact economic growth.
Strategically, Raedler recommends that investors adjust their portfolios to accommodate increased risk by reducing exposure to cyclical stocks. He also suggests reducing exposure to AI-related stocks, such as those in the semiconductor and mining sectors, which have already reached very high valuations relative to the overall market.
He also noted that defensive stocks in Europe are heavily overlooked because investors believe that "almost nothing can go wrong" in the current environment.
Ultimately, Raedler believes that global economic growth momentum could be impacted for the first time in four years, and there is a possibility of a demand contraction if energy risks persist.
refer : www.bloomberg.com
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