Hedge funds drop European stocks for US and Japan, analysts say

Hedge funds ditched European equities last week for stocks in the United States and Japan, client notes from JP Morgan (JPM.N), Morgan Stanley (MS.N) and Goldman Sachs (GS.N) show, as strong economic data lifted equity markets in both countries.

Commodity Trading Advisors, hedge funds that use algorithms to trade market trends, rotated out of European and Hong Kong stocks and have moved into the United States and Japan, a JP Morgan note seen on Monday showed.

These funds have taken the largest bullish position in Japanese stocks seen in about two years, while long, or bullish bets, on UK stocks were “trimmed the most in May,” the note said.

A strong U.S. jobs report and relief that a U.S. debt ceiling crisis had been averted propelled the S&P 500 Index to its highest since last August on Friday, while investors are betting the Bank of Japan would retain its ultra-loose policy, pushing the Nikkei to a 33-year high in its biggest daily gain since Jan. 18 on Monday.

This report’s information was first seen on REUTERS; to read more, click this link.