As the US stock market was much less affected by market stress than its European equivalents, truecorresponding sentiment rose in October from 33 to 60 points, its highest level since August 2013. US equity sentiment is now on par with that for Japanese equities, an asset class asset managers have been consistently in love with for the past two years.
Meanwhile, fund management groups have seriously started to question the probability of European stock markets profiting any further from an economic recovery which seems to have run out of steam before it had even started properly. European equity sentiment registered the strongest monthly drop since June 2013, falling from 20 to 7 points.
Emerging market sentiment crashes
But emerging market equity sentiment registered by far the strongest drop, plummeting from 40 to 0 points. This is the strongest monthly descent since records began in 2004. Even at the height of the financial crisis six years ago, the sentiment change was not as abrupt. As fund managers greatly underestimated the impact the financial crisis would have on emerging market equities back in 2008, they may well be overshooting now. After a drop of almost 7% in October, the MSCI Emerging Markets Index has shown a positive performance so far in November.