Investor sentiment on the stock market is tumbling following a string of setbacks, including a recent downgrade of several big banks and a downgrade of other large investors, according to new research from Nomura.
The report, titled “Investors at risk, not just of being outbid, but being priced into extinction,” was released on Thursday.
Nomura analysts said the decline in sentiment is driven in part by concerns about potential corporate defaults, which are also pushing down the price of stocks.
Investors are concerned about a possible default on the debt of two major banks in the U.S., according to the Nomura report, and are particularly worried about the possibility of a potential government shutdown, which could push down the stock prices of a number of other big financial institutions.
Nominals from the Nomada Group and Morningstar, which both track the stock-market, said the sentiment dropped to negative in January after the bank ratings firm warned that banks would be forced to make costly investments to pay down debts if they are to remain solvent.
In a report on Thursday, Nomura said that the outlook for corporate bond yields has dropped significantly in the last six months.
Nomura also noted that there is little appetite for the stock markets to continue to rise, which has made investors less confident in the financials of the financial sector.
Investment firms are more likely to buy back shares of the stocks they buy in the event of a default, but there is also an increase in corporate defaults that could drive stock prices lower, according a Nomura research note.
While the stock bubble was only recently under control, Nomurals research shows that the stock index is now on track to have its worst month since March 2014, with the Dow Jones Industrial Average down more than 20% in January.NOMURA analysts said investors are also becoming more cautious in their buying of bonds and other financial instruments, as well as in the bond market.
Nnomura said there is a lack of evidence that corporate defaults have significantly increased, but it noted that the U,S.
Treasury Department has warned of “a potential risk to the U