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Investing.com - Global investors are showing increased optimism about economic growth as concerns about Trump administration policies and trade wars diminish, according to a Bank of America EU survey released Monday.
The survey reveals that the Trump administration’s policy mix has dropped to the second biggest downside risk for global growth after being the top concern for most of this year. Trade war fears triggering a global recession are now seen as the biggest market tail risk by only 5% of respondents, down significantly from nearly 40% in July.
This declining concern, coupled with growing expectations of monetary easing—identified as the top upside risk for global growth—has strengthened confidence in the macroeconomic outlook. While a soft landing remains the majority view on global growth, the percentage of respondents expecting no landing has increased to 33%, the highest since February, while global recession expectations have fallen to the lowest level since 2022.
The survey indicates a decisive shift toward a higher-for-longer macro backdrop for markets with robust growth and sticky inflation, rather than stagflation. European equities optimism has jumped, with 11% of respondents expecting material near-term upside—the highest since at least early 2023—and 57% expecting mild upside, the highest since February.
Europe remains an overweight among global investors but has slipped behind emerging markets as the preferred global region, while the gap with the U.S. is narrowing as investors have closed their reported underweight of U.S. equities. German equities continue to be the most preferred country allocation, while French equities remain least preferred, likely due to renewed political uncertainty.
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