Last week, hedge funds shifted their focus from U.S. stocks to global industrials, as U.S. equities endured their worst one-day decline since April, fueled by renewed U.S.-China trade tensions and the ongoing government shutdown.
- For the first time in seven weeks, hedge funds held more short than long positions in U.S. stocks, signaling caution on large indices.
- Outside the U.S., funds piled into global industrials—transport, defense, energy, electrical equipment, machinery, and aerospace—expecting stock prices to rise.
- Europe and developed Asia were the primary beneficiaries, while U.S. industrials lagged.
- Hedge funds maintained long positions in tech, which remained the most net-bought sector globally and in the U.S. for the fourth out of five consecutive weeks.
Goldman Sachs notes that hedge fund trading in global industrials reached some of the highest levels in five years, highlighting a strategic rotation into sectors tied to real-world infrastructure and production growth.