Morgan Stanley Investment Bank stated that the global market sentiment index has turned positive, indicating a shift towards a “risk appetite” after maintaining a neutral reading since January, according to a note from the bank issued on Tuesday.
The Morgan Stanley Market Sentiment Index (MSI) combines data from surveys, positioning, volatility, and momentum to measure and quantify market pressure and sentiment.
Sentiment hit its lowest level in two years on August 8, driven by negative signals from MSI surveys after the July peak. However, since then, eight out of ten metrics have shown positive changes, leading to a reversal in sentiment and generating a positive signal. Strategists have clarified that any deterioration in sentiment data again could cause the signal to return to neutrality.
U.S. stock indices rose on Tuesday, reaching their highest level in about two weeks, as weak producer price data strengthened expectations of a potential interest rate cut by the Federal Reserve in September.
Producer prices in the United States rose less than expected in July, as higher commodity prices offset lower service costs, indicating a continued slowdown in inflation. The Producer Price Index grew by 2.2% on a yearly basis in July, after a 2.7% increase in June.
Investors are now focusing on the July consumer price data, which is set to be released today, Wednesday, and the retail sales figures on Thursday, which could strengthen expectations of a sharp interest rate cut by the Federal Reserve.
