Oil Prices Slip as U.S.–Iran Talks Ease Supply Disruption Fears 
Silver Prices Plunge in Asian Trade as Dollar Strength Triggers Fresh Precious Metals Sell-Off 
Gold and Silver Prices Rebound After Volatile Week Triggered by Fed Nomination 
South Korea’s Weak Won Struggles as Retail Investors Pour Money Into U.S. Stocks 
U.S. Stock Futures Slide as Tech Rout Deepens on Amazon Capex Shock 
Trump Lifts 25% Tariff on Indian Goods in Strategic U.S.–India Trade and Energy Deal 
Global Markets Slide as AI, Crypto, and Precious Metals Face Heightened Volatility 
Australia’s December Trade Surplus Expands but Falls Short of Expectations 
Singapore Budget 2026 Set for Fiscal Prudence as Growth Remains Resilient 
Bank of Japan Signals Readiness for Near-Term Rate Hike as Inflation Nears Target 
Fed Governor Lisa Cook Warns Inflation Risks Remain as Rates Stay Steady 
Asian Markets Slip as AI Spending Fears Shake Tech, Wall Street Futures Rebound 
U.S.-India Trade Framework Signals Major Shift in Tariffs, Energy, and Supply Chains 
China Extends Gold Buying Streak as Reserves Surge Despite Volatile Prices 
Asian Stocks Slip as Tech Rout Deepens, Japan Steadies Ahead of Election 
RBI Holds Repo Rate at 5.25% as India’s Growth Outlook Strengthens After U.S. Trade Deal 
Despite a recent rally in Chinese equities, many investors remain uncertain about its sustainability. Bank of America (BofA) strategists suggest the potential for a re-rating of Chinese stocks. However, U.S. mutual funds appear underprepared for a sustained rally. Of the 50 S&P 500 stocks most sensitive to the MSCI China index, only 13 are overweight in aggregate fund holdings, indicating investors are more prepared for a brief uptick or a "head-fake" than a prolonged surge in China-exposed equities.
Fed Rate Cuts and a Shift Toward Equity Income
With expectations of the Federal Reserve cutting interest rates by around 2 percentage points, BofA predicts retirees might shift their cash from money market funds into higher dividend-yielding equities. However, large operators (LOs) have increasingly favored long-term growth (LTG) stocks over those with high dividend yields. This shift is evident in the record-low aggregate dividend yield of fund holdings compared to the S&P 500. Additionally, retail investors have been leaning towards tech and growth stocks, with four of the top five most widely held stocks in Merrill accounts being tech-related.
Defensive Stance Despite Economic Optimism
While BofA economists have raised their GDP and earnings forecasts through 2025, both long-only (LO) and hedge funds (HF) remain defensively positioned. Despite the Fed starting an easing cycle, these funds continue to hedge against potential economic downturns. BofA contends that this "double-stimulative" environment—where both profits and rate cuts are at play—could favor cyclical stocks over defensive ones, potentially positioning value stocks to lead as profits improve.
Tax Loss Harvesting: Potential Volatility in October
BofA anticipates that October could bring about tax loss harvesting, a strategy employed since the Tax Reform Act of 1986. Historically, stocks that fall 10% or more by the end of September tend to underperform the S&P 500 in October by 85 basis points. According to BofA, these trends may create headwinds for certain stocks before a potential rebound in November.
