Half Last Week's Record Stock Inflows Just Got Yanked Back OutBy
U.S. stocks see outflows; government bonds, gold lure inflows
Japanese equities continue to attract funds despite trade risk
Even before the ramp up in global trade tensions on Thursday, investors were heading for the exit from risky assets, just one week after plowing a record amount of money into the stock market.
Some $19.9 billion was withdrawn from equity funds in the week to March 21, Bank of America Merrill Lynch said in a report, citing EPFR Global fund flow data. The U.S. saw the brunt of the selling with $24.9 billion pulled from American stocks. High-yield bond funds were also in the cross-hairs with an outflow of $1.6 billion, the 10th straight week of redemptions.
Market participants faced a deluge of catalysts this week as Federal Reserve officials raised the benchmark lending rate a quarter point and forecast a steeper path of hikes in 2019 and 2020, citing an improving economic outlook. Yet concerns about increasing protectionism were justified, as President Donald Trump imposed tariffs on at least $50 billion in Chinese imports, sparking an initial $3 billion in reciprocal measures from China.
Still, investors are not positioned for a trade war, according to Merrill Lynch’s strategists. Japanese equities enjoyed a 16th straight week of inflows at $1.9 billion, while $2 billion was added to emerging-market stock funds.
The dialing back of risk appetite was also evident elsewhere. Investment-grade bond funds gained $1.4 billion of new money, and government bond funds were also net gainers, receiving $1.5 billion, according to the report. Precious metal funds gained $1.5 billion.