Global investor sentiment hits strongest level since February, Bof A survey shows.

Global investor sentiment has risen to its strongest level since February, with fund managers becoming more optimistic about the economic outlook, spending linked to artificial intelligence and the prospect of a more accommodative Federal Reserve policy, according to Bank of America's latest Global Fund Manager Survey.

The survey was conducted between July 2 and July 9, following an interim agreement aimed at ending the U.S. -Iran conflict and largely before hostilities resumed.

The July survey showed that investor sentiment reached its highest level since February, reflecting increased confidence in global growth, artificial intelligence-related capital expenditure and expectations for easier monetary policy.

A record 54% of respondents expect a "no landing" scenario for the global economy, in which growth continues without a significant slowdown, while only 2% anticipate a hard landing.

Investors increased their equity allocations to the highest overweight position since December 2024. Long positions in global semiconductor stocks remained the market's most crowded trade for a third consecutive month, cited by 82% of investors.

Although some investors reduced their technology exposure in July, none reported holding short positions in the sector. According to the survey, 61% of respondents believe major technology companies are unlikely to reduce capital expenditure this year, compared with 28% who expect spending cuts.

Risks of an artificial intelligence bubble emerged as the biggest perceived threat to markets, identified by 45% of respondents.