Confidence is rising across global markets as Bank of America surveys reveal investors, fund managers and business owners preparing for a stronger year. Cooler inflation and steadier policy signals have encouraged a broad shift back toward risk.
Investor positioning moved sharply in November. Equity and commodity allocations increased, pushing cash levels to 3.7% and activating BofA’s sell signal. Portfolios are now 34% overweight global stocks, the highest level since February, and hold the strongest commodity positions since 2022.
Market warnings
Despite this appetite, 63% view equities as overvalued. An AI bubble is considered the top tail risk by 45%, while a record share believes corporate spending, especially among hyperscalers, has become excessive. Private equity and private credit were named the most likely source of systemic stress by 59% of respondents.
European managers reported their strongest optimism since 2021. A net 77% expect faster regional growth, supported mainly by anticipated German fiscal measures, cited by 73%. Improved confidence in global monetary conditions lifted sentiment further. A net 3% now expect global economic improvement, marking the first positive reading this year, and 37% foresee a no-landing scenario.
Spreading momentum
Expectations for softer European core inflation increased, reflected in a net 27% projecting a decline. Equity prospects remain bright, with 77% anticipating near-term gains and a record 92% expecting upside over the next year. Cyclical sectors are drawing renewed interest, and Germany remains the most preferred market. Cash among European respondents stands at 3.8%.
Small and mid-sized businesses in the United States are showing similar momentum. Revenue growth is expected by 74%, and nearly 60% plan expansion despite labour shortages and supply chain pressures.
Roughly half expect economic improvement as tariffs stabilise and inflation eases. Hiring plans remain firm, with layoffs limited to 1% and 43% preparing to add staff. AI tools are now embedded in operations for 77% of owners.
