Investors expect more quantitative easing from the European Central Bank in a fresh attempt to tame wild eurozone markets, according to a leading survey of fund managers, as their risk appetite holds while they wait for a policy response to the latest crisis.
Stock markets across Europe have been falling as a worsening political crisis in Greece following inconclusive elections, with politicians so far unable to form a new government, threatens its membership of the single currency area.
Many fear a Greek exit from the euro is inevitable and will be disorderly, leading it to default on its vast debts and sending a catastrophic shockwave through the rest of Europe and the world, pulling everyone back into a global recession.
The Bank of America Merrill Lynch European Fund Managers Survey for April showed that 65 percent of those asked think the ECB will engage in another round of quantitative easing.
"A root cause of why investors are maintaining such a measured (calm?) view of risks is presumably linked to a belief that a policy response will be unleashed on any 'serious' macro disappointment," said the BofA Merrill Lynch Global Research report.
"Clearly a challenge is assessing how bad events need to be (and its impact on asset markets) before authorities feel compelled to act."
The report added: "Despite investors taking a lower level of risk in portfolios, overall it looks like a very measured reaction so far."