Global investors have shown increasing optimism about economic growth as concerns over Trump administration policies and trade wars have receded, according to a Bank of America Group Europe survey released Monday.
The survey reveals that the Trump administration's policy mix has declined to the second-largest downside risk to global growth after being the primary source of concern for most of this year. Fears of a trade war leading to a global recession are now seen as the biggest unexpected market risk by only 5% of respondents, down significantly from nearly 40% in July.
This decline in concerns, coupled with rising expectations of monetary easing—identified as the biggest upside risk to global growth—has boosted confidence in the macroeconomic outlook. While a soft landing remains the dominant view on global growth, the proportion of respondents anticipating no downturn has risen to 33%, the highest level since February, while expectations of a global recession have fallen to the lowest level since 2022.
The survey signals a decisive shift toward a longer-term, higher macroeconomic backdrop for markets, with strong growth and sustained inflation, rather than stagflation. Optimism about European equities has increased, with 11% of respondents expecting a significant upside in the near term—the highest level since at least early 2023—and 57% expecting a slight upside, the highest level since February.
Europe remains overweight among global investors but has fallen behind emerging markets as the preferred global region, while the gap with the United States is narrowing as investors close the reported underweight of U.S. equities. German equities remain the most favored country allocation, while French equities remain the least favored, possibly due to renewed political uncertainty
