According to analysts, bulls are now taking the upper hand in the global equity market. Many investors have been buying up assets since February of this year when the global stock markets have peaked.
Curiously enough, despite all doom and gloom in the market, bears remain in the shadow of the dazzling and unstoppable bullish rally. At the same time, optimism in the stock market has been fueled by hopes on the development of a vaccine against the coronavirus. Thus, the stock market is growing steadily amid such encouraging news.
Among investors surveyed by Bank of America, 46% described equities as being in a bull market. Therefore, a long-term bull trend is currently prevailing in the market. Moreover, BofA points out that the marked rise in bullishness among traders is still far from dangerously bullish sentiment levels.
The world equity market bounced back by 51% from its mid-March lows. So far, shares of many companies have added $24 trillion as investors expected a rapid recovery in economic activity. 79% of the survey respondents said they believe in a rapid recovery of the world economy, notching the highest reading for the last 11 years.
"Asset allocation stubbornly skewed toward US growth stocks," BofA said. Demand for other assets, in particular European stocks and emerging market securities, is much lower. According to experts, over the past four months, IT companies’ shares have grown significantly. The long gold trade took second place. Investors have always considered gold one of the most reliable safe-haven assets. However, 31% of respondents said that gold was overvalued. Maybe it is not far from the truth as gold has delivered its best performance in nearly a decade.
Some experts warn that a sharp shift from a bear market to a bull one can lead to negative consequences.
However, analysts at BofA are sure that "the quickfire bear-to-bull switch is not only justified but deserves to go further."
