Gold Prices Slide Below $5,000 as Strong Dollar and Central Bank Outlook Weigh on Metals 
Trump’s Inflation Claims Clash With Voters’ Cost-of-Living Reality 
Dow Hits 50,000 as U.S. Stocks Stage Strong Rebound Amid AI Volatility 
Japan Economy Poised for Q4 2025 Growth as Investment and Consumption Hold Firm 
Singapore Budget 2026 Set for Fiscal Prudence as Growth Remains Resilient 
Oil Prices Slide on US-Iran Talks, Dollar Strength and Profit-Taking Pressure 
Trump Signs Executive Order Threatening 25% Tariffs on Countries Trading With Iran 
Trump Endorses Japan’s Sanae Takaichi Ahead of Crucial Election Amid Market and China Tensions 
U.S. Stock Futures Slide as Tech Rout Deepens on Amazon Capex Shock 
Asian Stocks Slip as Tech Rout Deepens, Japan Steadies Ahead of Election 
South Korea Assures U.S. on Trade Deal Commitments Amid Tariff Concerns 
Gold and Silver Prices Slide as Dollar Strength and Easing Tensions Weigh on Metals 
Fed Governor Lisa Cook Warns Inflation Risks Remain as Rates Stay Steady 
Japanese Pharmaceutical Stocks Slide as TrumpRx.gov Launch Sparks Market Concerns 
U.S.-India Trade Framework Signals Major Shift in Tariffs, Energy, and Supply Chains 
Russian Stocks End Mixed as MOEX Index Closes Flat Amid Commodity Strength 
Dollar Steadies Ahead of ECB and BoE Decisions as Markets Turn Risk-Off 
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.
