Barclays has reduced some equity risk exposure ahead of September as its strategists assess seasonal market patterns, softer economic indicators and renewed pressure from interest rates and energy prices.
The bank nevertheless continues to hold a constructive medium-term view on equities, citing economic activity, corporate earnings and relative valuations.
Strategist Emmanuel Cau said the calmer market conditions seen during the summer have shifted towards a more volatile environment.
“Less beta and more tactical hedges seem wise, but a lot of hawkishness is priced in now, while resilient growth & earnings remain a key anchor to the bull market,” he wrote.
Among the factors identified by Barclays is September’s historically weaker seasonality, particularly before U.S. midterm elections. The bank also cited moderation in U.S. activity data and the fading contribution from the second-quarter earnings season.
Interest rates remain another factor in the bank’s assessment. Barclays economists forecast two additional Federal Reserve rate increases in 2026 and also expect further tightening from the European Central Bank and Bank of Japan.
Energy prices represent an additional source of uncertainty. The continuing U.S.-Iran standoff has kept oil prices elevated, with Cau describing energy prices as being in “the danger zone.”
The strategists also said the artificial intelligence investment theme is maturing, with increasing dispersion between companies benefiting from the trend and those experiencing different outcomes.
Barclays said it considers the current risks manageable within its broader equity outlook.
“Big picture, however, we see these hiccups as manageable, as the key pillars supporting equities stay firmly in place,” Cau wrote.
The bank pointed to resilient global activity, earnings-per-share growth of around 20% and valuations that it said continue to favour stocks relative to bonds.
Reflecting its near-term assessment, Barclays reduced beta exposure and moved construction materials to marketweight. It raised insurance to marketweight while retaining a constructive view on capital-expenditure-related opportunities in industrials, technology and mining.
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