Barclays says a year-end stock market rally now depends on oil prices falling, since systematic funds have become the market's main source of support while other investors turn more cautious. Retail sentiment has turned its most bearish point of the year so far, the bank said in a Wednesday note.
Quant funds have become the stock market's main source of support, according to Barclays, and the bank says a year-end rally now depends on oil prices falling. A team led by Emmanuel Cau, head of European equity strategy at the London-headquartered bank, set out the view in a Wednesday note.
Wall Street appetite is deteriorating, and retail sentiment has turned its most bearish so far this year, Barclays said. Meanwhile, systematic funds, which trade through computer-run, predefined algorithms, have pushed their stock exposure close to peak levels, the bank said.
That split leaves the stock market dependent on one group of buyers as appetite among other investors sours. Barclays ties the next leg higher to a drop in oil prices, framing it as the condition a year-end rally now needs.
Source: MarketWatch (snippet-based)
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