By Nell Mackenzie

LONDON (Reuters) – Hedge funds targeted on European inventory markets suffered their largest month-to-month losses in over a yr in October, dragged down by a broader market dump, based on a Goldman Sachs be aware despatched to purchasers on Friday and seen by Reuters on Monday.

European inventory pickers returned a unfavorable 2.6% in October, their largest month-to-month loss since September 2023, Goldman Sachs mentioned.

The area’s broadest index of European shares fell 3.6% in October throughout the third-quarter earnings season, which has seen optimistic outcomes from banks, prescribed drugs and biotech firms offset by a drag from industrials and power firms.

European shares had been offered broadly by all market members, as world merchants dumped their European holdings in favour of hoovering up U.S. equities forward of the presidential elections, the be aware mentioned.

Declining inventory values in Europe knocked year-to-date returns for European merchants down to five%, lower than half the 11.5% posted by U.S. inventory pickers.

Losses principally resulted from utilities shares like fuel, electrical and water firms, Goldman mentioned.

Industrial shares and quick positions, which guess on a fall within the worth of an organization’s shares, made cash for a number of the hedge funds, it added.

Shares that skilled the most important internet promoting had been from {hardware} tech like semiconductor and semiconductor gear firms, in addition to the aerospace and defence sectors, the financial institution mentioned.

Monetary shares, which usually embody banks, had been probably the most net-bought sector for a second month in a row, with hedge funds ditching quick positions and including lengthy positions which guess on an increase in worth, Goldman mentioned, with out giving an additional breakdown.

European-focused basic inventory pickers “considerably” decreased gross leverage in October, the financial institution mentioned, whereas internet leverage hit its lowest this yr.