sentix-ASR Essentials 50-2017

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Historically high neutrality points to risk of rise in equity volatility

The latest sentix survey revealed that the recent turnaround in sentiment towards eurozone bonds versus equities is continuing as the festive period draws near, while at the same time investors’ medium-term strategic bias on the EuroSTOXX continues to weaken. In terms of near-term equity sentiment, survey readings are running at modestly positive levels. However, beneath the surface, investors’ neutrality on the near-term outlook for the EuroSTOXX index has reached historic highs. This chimes with historically low levels of implied market volatility, as measured by the VSTOXX Index. It suggests potential for a pick-up in equity volatility as markets move into next year. See charts 2-4, p2.

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