Growing pessimism about global equities markets – along with uncertainty over the Federal Reserve Bank’s policy direction – have combined to dampen US investor confidence entering the second half of 2014, according to a study conducted by TradeStation, a Monex Group company.
In the online survey conducted in June 2014, U.S investors’ perception of global equities turned more negative, with fewer than one in three (29%) predicting that global stocks will rise in the third quarter of 2014, well below the 46% and 54% who predicted a rise in the March 2014 and December 2013 quarterly surveys, respectively.
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The percentage of U.S. survey respondents who see global equities markets declining in the next three months jumped to 35% from 26% in the March 2014 survey.
Another possible contributor to investors’ somewhat diminished enthusiasm: uncertainty about where Federal Reserve Bank policy is heading, and when.
When asked about the tapering of the Fed’s quantitative easing program, investors were split down the middle – 46% predict the Fed’s asset purchases will end this year as planned, but 54% say that they will not or that they simply do not know.
Investors expressed similar uncertainty when asked when the Fed will begin to raise interest rates again ‘ just under half (48%) answered 2015, just under a third opted for 2016, and 21% predicted 2017.
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By GlobalDataNot surprisingly, these perceptions colored investors’ expectations for their own trading volume over the next 12 months. Compared to March 2014, there was a slight uptick – from 57% to 60% – in the percentage of respondents who expect their trading volume to increase over the next year; at the same time, however, the percentage of investors expecting to trade less over the coming year more than doubled, to 9% from 4% in March 2014.
While investors remain focused on the U.S. equities markets – 58% of TradeStation customers expect U.S. stocks to outperform stocks in Europe/U.K., Asia (excluding Japan) and Japan – slightly down from 61% last quarter – they expressed somewhat less enthusiasm about the opportunities those markets may present.
For example, the percentage of investors who consider stocks to be an attractive investment in 2014 dropped from 70% to 59%. Similar declines in favorable investor sentiment were seen with ETFs, options, futures and foreign exchange, while more conservative holdings like bonds and mutual funds saw a slight uptick in favorability.
"This quarter’s results draw a mixed picture," said Salomon Sredni, CEO of TradeStation Group, Inc. and COO of Monex Group, Inc. "Although investors are clearly struggling through a period of uncertainty, a solid majority of TradeStation clients still foresee their trading volume continuing to increase through 2014.
So it’s more important than ever that we work to ensure that our clients have the best possible tools and resources to help address their uncertainties and take advantage of opportunities that these markets present."
Monex has been conducting its monthly retail investor survey with its Japanese clients since October 2009.
