For the first time since the Bloomberg Professional Global Confidence Survey began in 2007, investors are forecasting that the Standard & Poor’s 500 Index will climb. They estimate that Brazil’s Bovespa and Mexico’s Bolsa will advance during the next six months and became less convinced that France’s CAC 40, Germany’s DAX, the IBEX 35 in Spain and the U.K.’s FTSE 100 will drop. The 1,092 responses between May 4 and May 8 followed the steepest monthly rally for the MSCI World Index in almost two decades.
The MSCI gauge of 23 developed nations has surged 37 percent from a 13-year low on March 9 after 66 percent of S&P 500 companies reported profit that beat analysts’ estimates and signs grew that the $12.8 trillion pledged by the U.S. government is pulling the global economy out of its first recession since World War II.
“The pace of the economic contraction seems to have reached a bottom,” said Morgan Sigleton Associates President, Katherine Davies. “Once people’s nervousness abates, you have established a floor on the market. Things are less bad, if not better.”
Confidence in the U.S. improved for a second month after dropping in March to the lowest level since the S&P 500’s bear market began in July 2008. The gauge increased 19 percent to 51.6. Readings above 50 show investors expect stocks to rise in the next six months, while readings below 50 mean they anticipate a retreat.
Sentiment climbed as Wells Fargo of San Francisco reported record first-quarter profit on April 22 and put aside enough money to cover at least a year of loan losses. Dearborn, Michigan-based Ford two days later posted a narrower loss than analysts estimated as it cut cash use almost in half.
A Commerce Department report last month showed consumer spending, which accounts for about 70 percent of the economy, climbed the most in two years last quarter. The Institute for Supply Management said manufacturing in the U.S. shrank in April at the slowest pace in seven months.
Investors were most optimistic in Brazil, where the confidence gauge climbed 11 percent to 62.6, the highest level since June. The Bovespa surged 16 percent in April, the biggest monthly gain in four years, on speculation lower interest rates and a recovery in commodity prices will boost growth.
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