Investors remain optimistic, continue to purchase stocks – BofA.
Investors Continue to Buy Stock and Bond Funds
By Samuel Indyk
LONDON (Reuters) – According to a report by Bank of America global research, investors are showing continued interest in stock and bond funds. This comes after the recent policy decisions made by the Federal Reserve and the European Central Bank.
Stock Funds and Technology Funds See Inflows
Bank of America reports that stock funds have seen $4.8 billion of inflows. Additionally, technology funds have experienced an acceleration in inflows, with nearly $6 billion in the last four weeks.
Financials Experience Outflows, Bond Funds See Inflows
Financials, on the other hand, have seen an outflow of $1.8 billion, marking the largest outflow from the sector in 12 weeks. Meanwhile, bond funds have seen $7.2 billion of inflows. However, TIPS (Treasury Inflation-Protected Securities) have experienced outflows again after a brief inflow in the previous week.
Investors React to Recent Policy Decisions
The Federal Reserve recently raised interest rates to their highest level in 22 years, but hinted that they may have peaked. Similarly, the European Central Bank has left the door open to a pause in its tightening cycle in September. These decisions have influenced investor behavior.
Increased Inflows to Cash Reflect Uncertainty
Investors have also been parking their money in cash, with inflows accelerating in July. This suggests that some investors are uneasy about a potential “soft landing” scenario. Bank of America highlights that inflows have averaged $26 billion per week in July, compared to an average of around $4 billion per week in June.
Gold Funds Experience Outflows, Bull & Bear Indicator Rises
Outflows from gold funds have reached $1.2 billion, marking the tenth straight week of outflows and the longest streak since November last year. Meanwhile, Bank of America’s bull & bear indicator, a measure of market sentiment, has risen to 4.1 from 4.0. This is its highest level since the banking turmoil in March. The indicator is driven by stronger inflows to emerging market stocks, improving credit technicals, and bullish positioning from hedge funds.
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