Though the 'euro-phoria', reflected in last month's Market Expectations Indicator, may have helped drive the equity rise in Euro-zone markets after the change-over weekend, some of that enthusiasm has evaporated. Judging by this month's indicators (see pages 14/15), just 65% of respondents are expecting euro equity rises, compared with 70%.
But, encouragingly, there has been a positive shift for other markets, as more managers than last month are looking for prices to rise, with 32% (as against 29%) expecting US equities to move upwards and a welcome rise is predicted for Asian stocks where 45% (42%) are looking for increases.
In managers' eyes, the UK is showing very clear signals of equity price uplifts, with 50% of managers thinking in these terms, compared with 42% last month. But expectations regarding Japan also slipped down to 26% (28%), albeit a rather slim adjustment downwards, but this has been emphasised with the 28% (22%) now predicting further falls in Japan. A month ago, 50% of managers were predicting stability in Japanese prices, which only 46% are doing currently.
As far as bond prices are concerned, the switch in outlook for US bonds has been the most dramatic of the changes, with 44% of respondents indicating a rise in contrast with the previous month's 56%. Most of those changing their views have moved into the stability camp with 47% sharing this outlook, compared with 39%, and 9% (6%) predicting falls. In Japan, managers expecting rises have crept up to 8% (3%), and the proportion of those predicting falls has reduced to 59% (67%). Judging by the virtually unchanged expectations for sterling and euro bonds, it is hard to see that the current wave of Brazil-induced turbulence has really caught hold.