The world equities outlook deteriorated in the past month, according to the Merrill Lynch Fund Manager Survey released today. The surveys Stock Market Conditions Indicator, a survey measuring investor sentiment, was +7.2 in April, down from +12.1 in March. Institutional investors surveyed said the decrease was due to lowered profit expectations, the prospect of rising interest rates, apparently overvalued equity valuations and decreased optimism on the part of investors.
Thirty-eight percent of the managers surveyed chose to underweight U.S. equities, while only 27% chose to underweight Japanese stocks. "Theres a lot of negative sentiment toward the U.S. market, which is seen as the most overvalued, said David Bowers, Merrill Lynch chief global investment strategist.