Investors optimistic again, but not for all markets

Investor sentiment has recovered to pre-Liberation Day levels, as trade war and recession fears abate. 

This comes amid a strong rebound for stock markets since Donald Trump paused punitive tariffs against all of its trading partners and began to negotiate trade deals. 

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This is according to Bank of America’s latest survey of professional investors with nearly $600 billion (£440 billion) in asset between them.  

The S&P 500, measured in dollars is now up more than 2% so far this year and has recovered nearly all its losses since Trump’s 2 April tariff announcement. UK and European shares have done even better, rising around 6% in 2025, before accounting for dividends.  

Bank of America says we are now in a new “goldilocks bull” environment, with investors expecting a continued market recovery. 

Its research found that recession expectations have collapsed in the past two months, falling from net 42% of participants saying a global recession was likely in the following 12 months in April, to net 36% now saying it is unlikely. 

This will be good news for shares, but not all markets. Unusually, most professional investors now think international shares (not American ones) will be the best-performing asset over the next five years. 

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Less than 25% think US assets will continue to dominate ranked returns, and just 5% anticipate bonds to perform best. 

In June, investors are most overweight Eurozone shares, emerging market shares and banks, while underweight US stocks, the US dollar, and energy. 

Another asset tipped to perform well is gold – it is the most crowded trade for the third month running, taking the top spot from being long American tech giants. 

The gold price currently sits at $3,395 per ounce, up from around $2,600 at the start of the year. 

Bank of America takes a “bull & bear” reading by looking at the cash positions of professional investors. Currently, cash balances are at 4.2%, which is neutral. Anything above 5% is a contrarian signal to buy and anything below 4% is a contrarian signal to sell. 

This suggests that while investors are optimistic, they are not ahead of their skis just yet.  

For investors looking to be contrarian today, Bank of America says buy US dollars, as most investors are expecting further dollar devaluation.