Market sentiment: “The shutters are closed for now”

16 July 2025. FRANKFURT (Goldberg & Goldberg). He did it: Last weekend, US President Donald Trump announced that he would impose new import tariffs of 30 percent on EU imports into the US as of August 1. But stock market traders ultimately reacted calmly to this news, even though the stock market barometer temporarily lost 2.7 percent of its value from last week's new all-time high. In the end, there was only a 1.1 percent decline compared to last Wednesday's sentiment survey.

According to a survey published yesterday by Bank of America (BoA), international fund managers in particular remained calm despite all the uncertainties surrounding possible US tariffs. Although 31 percent of them expect weaker global growth in the coming months, compared to April, when a record 82 percent expected such a scenario, asset managers seem to have almost become accustomed to adversity and threats from the US president. And cash holdings are at 3.9 percent, a level at which some commentators already sense a countercyclical sell signal (for the S&P 500). What's more, eurozone stocks are even more popular than before, with 41 percent of respondents saying they are overweight in this region, a new four-year high.

Cautious domestic investors
In contrast, the institutional investors with a medium-term trading horizon whom we surveyed do not seem to view the situation in this country calmly at all. Our Frankfurt Stock Exchange Sentiment Index shows another sharp shift, falling 34 points from the previous week to a new level of -30. This is the lowest level since the beginning of 2024. At the same time, the bull camp has shrunk by 17 percentage points, with former optimists doing a complete 180 and switching to the bear side. In the best case scenario, this change of position was made at the all-time high a week ago; at least many of the reversed bullish positions appear to have been profitable.

Private investors show a similar trend in today's survey. We also see a significant change in sentiment in this panel: our Frankfurt Stock Exchange Sentiment Index falls by 17 points to a new level of -6 (annual low). The bear camp has risen by 11 percentage points – the change is fed in roughly equal parts by formerly bullish and neutral investors. We are observing a similar trend among private investors, whom we survey via social media, and the other panelists, with the latter showing significantly higher activity.

Pessimism at record levels
Today's survey clearly shows that the tariff threats from the US have not left private and institutional investors in this country unscathed; the sentiment indices of both panels indicate the highest level of pessimism this year. However, in a historical context, these are not yet extreme values, but the tide has apparently been turned in time, reinforced in many places by previous gains. Interestingly, at least the participants in our survey hardly dared to buy during the recent DAX setback.

In contrast to the aforementioned international investors, whom BoA surveyed at least until July 10, i.e., before the announcement of trade tariffs for the EU, domestic asset managers have apparently hedged against the worst. Perhaps with the intention of returning as buyers at a lower level, probably initially in the range of 23,750/23,800 DAX points. Seen in this light, the DAX is far from lost. On the contrary: if today's short positions had to be taken back in the event of a significant price increase, there would be enough mass for a veritable short squeeze.

By Joachim Goldberg

16 July 2025, © Goldberg & Goldberg for boerse-frankfurt.de

The Frankfurt Stock Exchange Sentiment Index ranges between -100 (total pessimism) and +100 (total optimism), with the transition from positive to negative values marking the neutral line. 

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