By Nell Mackenzie
LONDON (Reuters) -Hedge funds last week rushed into global industrial stocks and dumped U.S. equities, which on Friday suffered their worst one-day sell-off since April as tariff woes resurfaced, Goldman Sachs said in two notes.
Hedge funds held more short than long positions in U.S. stocks for the first time in seven weeks, one of the notes from Goldman Sachs’ research desk said.
A long position expects stock prices to rise, whereas a short bet wagers they will fall.
These funds were predominantly betting, and possibly hedging, against declines in large indices, while maintaining long positions in individual company stocks, the note added.
U.S. stocks on Friday saw the worst one-day selloff since April as investors digested renewed U.S.-China trade tensions and the ongoing government shutdown, the note said. The S&P 500 fell 2.8% in the five trading days to October 10.
Outside the U.S., hedge funds last week bought the largest volume of global industrial stocks in six weeks, piling into companies that make big machines for industries such as transport, defence and energy companies, said another private note to clients from Goldman Sachs’ prime brokerage.
Last week was the second straight week hedge funds bought into these stocks, and the positions were made up almost entirely by trades expecting stock prices to rise, the bank added.
Europe attracted the largest proportion of the buying, followed by developed markets in Asia, while U.S. industrials were largely left out, the bank said.
Speculators favoured electrical equipment, machinery, commercial services and supplies, aerospace and defence as well as passenger airlines, said the note.
Hedge fund trading in the sector was at some of its highest levels of the last five years, said Goldman.
Meanwhile, technology stocks proved again to be the most net bought stock sector both globally and in the U.S. for another week, the Goldman client note said, adding that hedge funds have remained long in four of the past five weeks.
(Reporting by Nell Mackenzie; Editing by Jan Harvey)
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