Barclays strategists are telling clients to trim equity risk heading into September, citing seasonal weakness, softer economic data and renewed pressure from interest rates and oil prices. The bank still calls its medium-term outlook for equities constructive, pointing to resilient growth, earnings and valuations that favor stocks over bonds.
Barclays strategists are advising clients to reduce some equity risk exposure heading into September, citing seasonal market patterns, moderating economic activity and renewed pressure from interest rates and energy prices. The bank said it still holds a constructive medium-term outlook for equities despite the near-term caution.
Strategist Emmanuel Cau said market conditions have grown more volatile following a calmer summer. According to Barclays: "Less beta and more tactical hedges seem wise", Cau wrote, adding that a lot of hawkishness is already priced in while resilient growth and earnings remain a key anchor to the bull market.
September's seasonal drag
Barclays pointed to September's historically weaker market seasonality, particularly in periods preceding U.S. midterm elections. The bank also cited softer U.S. activity data and the fading effect of second-quarter corporate earnings. Monetary policy adds another headwind, as Barclays economists expect the Federal Reserve to raise interest rates twice more during 2026, alongside further tightening from the European Central Bank and the Bank of Japan.
Oil prices are a further source of uncertainty, with the unresolved U.S.-Iran standoff weighing on the energy market. Barclays also said the artificial intelligence trade is maturing, with greater differences now emerging in the performance of companies exposed to the theme.
Pillars for equities stay intact
Despite these near-term factors, Barclays said the broader conditions supporting equities remain intact. The bank cited resilient global economic activity, an earnings cycle running near 20% growth, and valuations that it said favor equities relative to bonds.
As part of its positioning, Barclays reduced overall beta exposure. The bank lowered construction materials to marketweight and raised insurance to marketweight, while keeping a constructive stance on capital-expenditure-related opportunities across industrials, technology and mining.
Source: InvestorsHub
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