Market sentiment: “As if they knew”

January 21, 2026. FRANKFURT (Goldberg & Goldberg). We only need to go back a week to find that the world was still a different place for many international investors. At least, that is what the Bank of America fund manager survey published yesterday suggests, although it was completed before US President Donald Trump imposed punitive tariffs on some European countries on January 15. The survey shows a high degree of risk appetite, which is reflected, for example, in a record low cash ratio of 3.2 percent among international asset managers. A net 48 percent of respondents also stated that they were overweight in global equities. However, this did not include US equities. A small majority of 3 percent of respondents said they were underweight in US equities. On the other hand, as we suspected, the number of respondents who said they were overweight in eurozone equities increased compared with the previous month, from a net 18 percent to 25 percent – an indication that there may have been capital inflows into the eurozone.

Today, one week later, many eyes are eagerly focused on the World Economic Forum in Davos, where US President Donald Trump is scheduled to give a speech at around 2:30 p.m. European equities had already weakened significantly since the beginning of the week, with the DAX alone losing up to 3.5 percent of its value since our last sentiment survey and subsequently regaining only a fraction of the lost ground.

Quite courageous

One could almost get the impression that the majority of institutional investors we surveyed had anticipated these price losses, as the DAX is still down 3 percent since the last sentiment survey. However, some of last week's pessimists do not seem to expect the stock market barometer to fall any further. Our Deutsche Börse Sentiment Index has risen by 16 points to a new level of -2. At the same time, the bull camp has grown by 11 percentage points, with about half of this increase coming from former pessimists and the other half from investors who were previously neutral. In other words, the former pessimists not only took profits, but also ventured into new bullish positions during the downturn, albeit on a manageable scale. Quite courageous.

Cautious private investors

The mood among private investors is quite different. In this panel, the Deutsche Börse Sentiment Index fell by 15 points to a new level of +4, i.e., in the opposite direction. A comparison of the data from investors surveyed via social media with that from the other members of this panel shows that the trend toward bearish sentiment is very similar in both groups. The bottom line is that we are seeing a significant increase of 9 percentage points among pessimists, although interestingly, two-thirds of these new bears were previously bullish and have now pulled the ripcord in a falling market, in some cases apparently even with losses.

So while private investors seem to be looking toward Davos with very mixed feelings, some institutional investors have recently been active in the form of dip buying. Ultimately, the mood gap between these two panels has narrowed significantly compared to the previous week.
The bottom line is that there is a clear polarization between bulls and bears on both sides. Overall, we can speak of a neutral starting position ahead of the important event risk, Donald Trump's speech and the discussions in Davos that are likely to accompany it. However, even if the outcome is positive, today's institutional bulls are likely to remain loyal to the DAX only if a potential recovery takes place quickly. From this perspective, the DAX is weighed down in terms of sentiment.

by Joachim Goldberg

January 21, 2026, © Goldberg & Goldberg for Deutsche Börse

The Deutsche Börse 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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