According to Bank of America Corp.’s report using EPFR Global data, global equity funds had $5.2 billion in outflows in the week ending May 18, led by mutual fund redemptions, while US stock funds saw a minor $0.3 billion inflow. Only Treasuries and government debt saw inflows, with outflows totaling $12.3 billion. Cash and gold were also sold by investors.
In the past week, investors have abandoned most major asset classes, with US equities and Treasuries being the only exception, amid fears that tighter monetary policy may push leading economies into recession.
Fears of an impending recession have been overstated, according to Goldman Sachs Group Inc.’s Kostin and JPMorgan Chase & Co.’s Marko Kolanovic, while Morgan Stanley and BofA warn the equities market fall has further to go.
Since March, stocks have lost roughly $12 trillion in market value as investors fled risk assets amid a flurry of worries about hawkish central banks and rising inflation.
Fears of a recession topped inflation and the Ukraine conflict in BofA’s monthly fund manager survey issued earlier this week, with investors turning the most underweight equities in two years.
Despite the fact that strategists ranging from David J.
While BofA’s proprietary Bull & Bear indicator fell to a “unambiguous” contrarian buy signal for stocks, strategists led by Michael Hartnett repeated their advice to short any bear rallies. After flirting with bear market territory last week, the S&P 500 attempted to recover this week, but the rally was short-lived, and the benchmark is on track for its worst weekly losing run since 2001.
According to Hartnett, the S&P 500 has had an average loss of 37.3 percent during the past 140 years, with an average duration of 289 days.
If history repeats itself, the latest bear market will end in October, with the S&P 500 at 3,000 points, or 23% below current levels, and the Nasdaq at 10,000 points, or 16% below current levels.
“The new bull case is 3,600,” Hartnett wrote in the memo, referring to the S&P 500 level, which represents a 7.7% drop from here.
In the past week, US stocks received $0.3 billion in inflows, followed by $0.2 billion in additions to Japanese equities, while European markets had their 14th week of outflows. Investors flocked to large-cap and growth equities in the United States, while fleeing value and small-cap companies.
Inflows were dominated by utilities and real estate, while outflows were led by financials, materials, and energy.
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