24.09.2022
Chicago 11, Melborne City, USA
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Equity funds lose $16.8 billion on US recession fears By Investing.com

Global equity funds posted their biggest outflow in nine weeks as investors hoarded cash amid fears that the US economy could face a recession. It is reported by Bloomberg.

According to Bank of America (NYSE:BAC), which cites data from EPFR Global, about $16.8 billion was withdrawn from global equity funds in the week ending June 22, with the first outflow of U.S. equities in seven weeks totaling $17. 4 billion. The data shows the bonds redeemed $23.5 billion, while investors moved $10.8 billion into cash and $0.6 billion into gold.

Bank of America’s individual bullish and bearish indicator remains at “highly bearish” valuations, strategists led by Michael Hartnett write in a note, which is a buy signal for the stock. Over the course of the year, investors bought $195 billion worth of stocks and sold $193 billion worth of bonds, they said, meaning capitulation on the shares has yet to be reached.

Bank of America’s individual bullish and bearish indicator remains at “all bearish,” strategists led by Michael Hartnett write in a note, a buy signal for the stock. Over the course of the year, investors bought $195 billion in stocks and sold $193 billion in bonds, they said, meaning capitulation on the shares has yet to be reached.

The US stock market has struggled to recover after it plunged into a bear market last week, and the S&P 500 index is still on track for its worst first half since 1970 amid fears of an economic slowdown. Federal Reserve Chairman Jerome Powell acknowledged this week that the soft economic landing was “very difficult.”

Despite the sell-off, strategists generally believe that stock markets have not bottomed out. Hartnett said last week that based on past bear markets, defined as a 20% drop in the index from recent highs, the current one for the S&P 500 will end in October with the index at 3,000 points. This is 21% below the current level.

Morgan Stanley (NYSE:MS) strategist Michael J. Wilson also believes that the index will fall to 3000, which fully reflects the extent of the economic downturn. And Manish Kabra of Societe Generale (EPA:SOGN) SA said this week that a 1970s-style shock amid stagnation with higher inflation could send the index down more than 30% from current levels.

In terms of trading style, US small and large cap stocks have led to capital outflows. By sector, materials and energy received the largest payouts. Technology, communications services and real estate have had an influx.

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