Investor Sentiment Reflects Cautious Optimism
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The U.S. Market Offers Fewer Compelling Buying Opportunities
The major U.S. indices turned lower last week, with key trendlines also coming under pressure. In such an environment, momentum is clearly favoring the sellers, making it difficult to identify attractive buying opportunities for the time being. The key question, of course, remains whether we are witnessing the beginning of a lasting trend reversal or merely a short-lived yet sharp correction. Accordingly, although a few stocks met the predefined screening criteria this week, none of them offered a particularly compelling entry point.
International Markets - Technical Analysis
Among U.S. indices, both the S&P 500 and the Nasdaq have broken their upward trends,which had been lasting for months. There is room for a correction, so it may only be worth buying well below current levels. The Russell 2000 began its decline earlier and has continued to fall since then. The DAX and the Stoxx 600, on the other hand, are showing some reversal from their strong support levels, but this appears to be more of a correction. The index tracking emerging markets has also broken below the lower boundary of its trading range and has begun a trend-like decline.
In our Institutional Investor Survey, we are providing a unique opportunity for our institutional clients to share and gain insights on market expectations and sentiment. Our focus is on Hungarian assets in the context of regional and global trends. Here, we highlight the most notable insights.
Investor sentiment toward Hungarian equities remains firmly positive, although the latest survey shows a modest reduction in conviction. The share of outright bullish responses fell from 8% to zero, while neutral views increased from 16% to 24%. The results suggest that investors continue to expect the BUX to perform well over the next three months but see less potential for a strong rally after the market’s previous gains.
The outlook for the broader CETOP Index has become more balanced. Slightly bullish responses increased from 40% to 47%, making this the largest category. The CEE region has been able to weather the risks posed by rising energy prices relatively steadily so far this year, supported primarily by domestic consumption and investments aided by EU funds. The CEE equity market remains significantly cheaper than Europe despite a stronger earnings outlook. Corporate profits are expected to grow by 30% this year, roughly twice the European rate, while margins are near record highs. This combination makes CEE one of the most attractive options for investors seeking inexpensive growth without direct exposure to the AI theme.
Investor expectations for the forint have become more cautious since the June survey. The largest share of respondents, 65%, now expect EUR/HUF to trade between 360 and 370 over the next three months, compared with only 24% in the previous survey. Investors continue to expect a broadly stable forint but see less scope for further appreciation from current levels.
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