The outlook on profits also worsened, with a net 4 per cent of managers surveyed expecting corporate profits to fall in the coming year – the first negative outlook in more than a year. Profit margins are also expected to tighten, although only by a net 1 per cent of respondents.

The negative economic and corporate outlook had a knock on effect on risk appetite, with investors moving into cash and away from cyclical stocks.

The cash holding of an average portfolio rose from 4.1 per cent in May to 4.4 per cent in July, and a net 39 per cent of the survey panel of investors is looking to take on lower than normal risk. Tellingly, allocations toward pharmaceuticals – a traditionally bearish position – have increased to the highest level since March 2009, when the market bottomed out following the crisis, according to Bank of America Merrill Lynch.

A total of total of 202 fund managers, managing a total of $530 billion, participated in the global survey from 1 July to 8 July.

Investors are more concerned about the outlook for US equities than at any point since November 2006, with a net 14 percent of respondents saying it is the region they would most like to underweight. In July, a net 14 percent said the US was the region they most wanted to overweight. Global asset allocators have already reduced exposure to the region, with net 7 percent of panel overweight US equities, down from a net 20 percent in June.

Asset allocators have also increased their eurozone equity positions, according to the survey, with net underweight positions falling from 27 per cent in June to 10 per cent in July, despite continued expectations of further weakening in the currency union.

Reduced risk appetites have also led to investors moving away from equities and into bonds: the proportion of surveyed investors overweight equities has slipped from 30 per cent in May to 11 per cent, while the proportion underweight bonds has fallen from a net 29 per cent in May to 15 per cent.

Due to the general weakening of expectations by investors, inflation fears have eased and a net 12 per cent of surveyed investors expect inflation to fall in the coming 12 months. This is the mirror image of inflation expectations in June, when a net 12 per cent were expecting inflation to increase over the same time span.