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Path of Least Resistance for Stocks Is Higher, Barclays Says.

stock :: 2025-05-28 :: source - bloomberg

By Sagarika Jaisinghani


(Bloomberg) -- Investor exposure to equities is still low enough that the “path of least resistance” for the market is higher, according to strategists at Barclays Plc.

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The team led by Emmanuel Cau said institutional investors weren’t a big part of the stock rebound in May, with positioning remaining broadly underweight.

Absent a volatility shock, “systematic buying could continue to help equities to grind higher,” Cau wrote in a note.

The MSCI All-Country World Index has rallied 5.7% in May, tracking its best month since November 2023, as global trade tensions eased. Still, risk appetite was dented last week by investor concerns around the US fiscal deficit.

All eyes are now on Nvidia Corp.’s earnings report, due later Wednesday, for clues on demand for artificial intelligence, which has powered much of the rally in tech megacap stocks.

US-domiciled investors sold domestic stocks and bought international equities in May, Cau said, although the “sell America” trade is largely concentrated in the dollar and bonds. Meanwhile, repatriation into Europe has paused with limited selling of US assets by European investors.

Cau correctly predicted earlier this month that a de-escalation in the US-China trade war would boost stocks.

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