Global Hedge Funds Focus on Buying Stocks in Cyclical Sectors for Second Consecutive Week, according to Goldman Sachs
Global hedge funds have continued their trend of buying more stocks than they sell for the second consecutive week, focusing largely on cyclical sectors such as energy, industrials, and materials, according to a report from Goldman Sachs. The renowned bank, which utilizes data from its prime brokerage clients to provide a market snapshot, reveals that hedge funds have been net buyers in 10 out of the 11 U.S. sectors, expressing confidence that shares in cyclicals will experience an upswing in the midst of an “almost no panic” market. Last week saw a surge of net buying in cyclicals, reaching its highest financial volume since September 2021, Goldman Sachs added.
The S&P 500 and the Nasdaq both rallied during the week, with gains of 1.37% and 2.31% respectively. Furthermore, a mega-cap rally propelled the S&P 500 index above 5,000 for the first time ever. Goldman Sachs highlights that there is considerable optimism in certain areas of the market, particularly noticeable through bullish options trading in major tech companies. The bank cautions, however, that the equity options market reflects scarce signs of panic due to the prevailing resilience of economic growth. Nevertheless, there is a growing risk of re-acceleration and a subsequent momentum unwind, states the report.
Analyst comment
Positive news. The market is expected to continue its upward trend as global hedge funds increase their buying of stocks, particularly in cyclical sectors. The S&P 500 and Nasdaq have already rallied, and there is considerable optimism and bullish options trading in major tech companies. However, there is a growing risk of re-acceleration and potential momentum unwind.
