Trump victory unleashed 'animal spirits; U.S. equity inflows - Barclays
STOXX 600 down 0.3%
French stocks underperform on budget worries
Wall St futures lower
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TRUMP VICTORY UNLEASHED 'ANIMAL SPIRITS' U.S. EQUITY INFLOWS - BARCLAYS
Inflows into U.S. equities reached their highest levels since March 2021 after Trump's election victory, say Barclays equity strategists, but the selling of European stocks continues unabated.
Big U.S. inflows were seen from long-only names, and the election result also spurred a retail buying frenzy, while CTAs' exposure inched higher.
Indeed, the S&P 500 .SPX is up 4.1% since Nov 5, versus a 1% drop in Europe's STOXX 600 .STOXX since then. It deepens the dramatic divergence in their performance so far this year, with the U.S. benchmark index up 26.24%, while Europe's is up just 5.3%.
Not all was rosy post-election though. Risk control funds and hedge funds did not up their exposure, Barclays says, and sentiment indicators also failed to rebound with the market.
They say this suggests "bullishness is not as widespread as it seems".
Elsewhere, the fact that there is dry powder on the table means there may be more equity upside yet.
"Record inflows in money market funds as rates went up over the past three years have yet to reverse, but may be deployed elsewhere at some point."
And even as 'Trumponomics' still has to fully materialise, rates markets have adjusted to the "Red Sweep" scenario, pricing out two interest rate cuts versus what was priced a month ago.
"This, in turn, augurs well for equities, as rates vol has started to decline with yields stabilising for now, while macro/earnings fundamentals remain supportive."
(Lucy Raitano)
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WEDNESDAY'S OTHER LIVE MARKETS POSTS:
STOXX 600 SLIPS, FRANCE UNDERPERFORMS ON BUDGET WORRIES CLICK HERE
EUROPE BEFORE THE BELL: FUTURES MIXED AFTER FOMC MINUTES, TARIFF THREATS CLICK HERE
TRUMP TARIFF THREATS REVERBERATE IN ASIACLICK HERE
Trump dump https://reut.rs/3CCoHhO
European shares mostly lower, France underperforms https://reut.rs/3V7zUNW
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