Morgan Stanley has issued a “full house” buy alert on international stock markets for the first time since early 2009, effectively calling the bottom of this summer’s equity slump.
The US investment bank said that all five of its market-timing signals are now flashing a buy signal as selling-fever reaches capitulation levels.
This is a rare occurrence, typically leading to a V-shaped recovery that delivers a 23pc gain in stock prices over the following 12 months.
Graham Secker, the bank’s chief European equity strategist, said the sell-off over recent weeks is largely driven by emotion and has little to do with the underlying outlook for the world economy.
“Equities remain very cheap relative to government bonds and there remains a lot of liquidity around that is looking for a home,” he said.
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