Investors shifted significantly toward a risk-on attitude for November after the decisive result of the US presidential election eased a great deal of uncertainty that had clouded markets for several months, according to the latest results from the monthly S&P Global Investment Manager Index (IMI) survey, released Nov. 12.

The IMI survey's Risk Appetite Index surged 49 percentage points from last month's results to reach 39%, marking the first positive reading in five months and representing the strongest positive sentiment since April 2021. The index measures net risk tolerance among surveyed investors.

"Investors seem to be in something of a honeymoon phase, being generally positive, with big expectations for the future, yet cautiously skeptical about the path ahead," Mohammad Hassan, equities dividend forecasting director at S&P Global Market Intelligence, said in a news release alongside the IMI survey results.

The S&P 500 gained 2.5% on Nov. 6 following the announcement of US President-elect Donald Trump's election victory. Looking ahead, about 55% of surveyed investors expected US equities to gain value over the 30 days following the Nov. 7 end of the survey period. Within the three-day survey period, 54% of the survey replies were collected after the election result was evident, with the other 46% collected on the day of the election.

US economy leads bullish tone

Investors continue to report that central bank policy has the highest potential to benefit near-term market returns, a now four-month trend that has coincided with the September start of the US Federal Reserve's interest rate easing cycle that continued in November. However, the IMI sentiment index for central bank policy dipped to 45% in November from 58% in October, the only negative change in the month.

Meanwhile, investor sentiment for the US macroeconomic environment's impact on market returns showed the second-highest net positivity score in November at 37%, rising 40 percentage points and swinging from a negative reading in October.

Bearish sentiment remained, however, for the global macroeconomic environment, suggesting that changes in the US political and economic landscapes were most responsible for the uptick in overall investor risk appetite.

S&P Global's Investment Manager Index survey includes monthly responses from a panel of just under 300 participants employed by firms that collectively represent approximately $3.500 trillion in assets under management. Data was collected Nov. 5-7. If you would like to receive the full report on a regular basis or participate as a panel member, please email economics@spglobal.com.

Since April's IMI report, surveyed investors have consistently reported expectations that politics would exert the most pressure on equities. This expectation persisted in November, albeit to a lesser degree. The negative 8% reading for political environment in November improved drastically from negative 75% in October.

"Political uncertainty is now seen as a much-reduced drag on equities, while increased optimism regarding the US economic outlook, lighter regulation and brighter earnings potential now accompany central bank policy as key market supports," said Chris Williamson, executive director at S&P Global Market Intelligence.

Cyclical sectors rebound

Risk sentiment was bullish in 10 of the 11 equity sectors tracked by the IMI, with only real estate showing a negative sentiment reading.

Of the 10 sectors with positive index readings in November, seven showed higher index scores from October's report. Some of the biggest gains were seen in cyclical sectors such as financials, information technology, industrials and consumer discretionary.

With more attention on cyclical sectors, positive sentiment softened for healthcare and other defensive equities.