Barclays sees reasons to take risk off the table in September

Investing.com -- Barclays strategists believe investors should trim risk exposure heading into September, citing a mix of seasonal weakness, cooling economic momentum and renewed rate and energy pressures, even as they maintain a constructive medium-term view on equities.

In a note, strategist Emmanuel Cau said the summer calm has given way to a choppier backdrop. "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.

The bank flagged September's historically poor seasonality, particularly ahead of U.S. midterm elections, alongside softer U.S. activity data and the fading tailwind from second-quarter earnings.

Barclays also pointed to the global tightening cycle, with its economists expecting two additional Federal Reserve hikes in 2026, joining the European Central Bank and Bank of Japan.

Oil is said to remain a wildcard, with an unresolved U.S.-Iran standoff keeping energy prices in what Cau described as "the danger zone."

The strategist also cautioned that the artificial intelligence trade is maturing, with growing dispersion between winners and losers.

Still, Barclays believes the risks are temporary. "Big picture, however, we see these hiccups as manageable, as the key pillars supporting equities stay firmly in place," Cau wrote, pointing to resilient global activity, an earnings upcycle with EPS growth near 20% and valuations that favor stocks over bonds.

The bank reduced beta, cutting construction materials to marketweight and raising insurance to marketweight, while staying constructive on capex plays across industrials, technology and mining.

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