LONDON (Reuters) – Hedge funds bought U.S. technology and media stocks at their fastest pace in four months last week, driven by an expected 50 basis point interest rate cut by the Federal Reserve, a Goldman Sachs note to clients seen by Reuters on Monday said.
Lower interest rates are expected to boost industrial spending, making it easier for companies to borrow money at lower costs and for consumers to buy technology products, all of which could benefit the stock prices of these companies.
Hedge funds placed nearly three times as many long positions betting on rising information technology stocks as those betting against them, the brokerage note said.
Buying in semiconductor and related equipment companies outpaced selling in tech devices, such as makers of computers, displays and hard drives, the Goldman Sachs note said.
Hedge funds also shed their short positions and added to their long bets on interactive media and entertainment companies, the note added.
A short position expects the value of the asset to decrease.
The broader technology and media sector now accounts for nearly a third of the portfolio’s total net exposure in the United States, she added.
In contrast, consumer products were the biggest sellers in Goldman Sachs’ prime brokerage book, according to the note.
Sales outpaced buying in U.S. consumer discretionary stocks such as hotels and restaurants for the first time in four weeks, and the sector suffered its biggest net sell-off in a year, the note said.
She added that total leverage, or the total borrowing and investments of hedge funds, reached about 278%, which is among the highest levels we have seen this year.
(Reporting by Neil Mackenzie; Editing by Amanda Cooper and Emelia Sithole-Matarise)
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