Global markets in “unambiguous contrarian buy territory,” Bank of America says – Reuters.com
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A man wearing a protective mask, amid the coronavirus disease (COVID-19) outbreak, walks past an electronic board displaying graphs (top) of Nikkei index outside a brokerage in Tokyo, Japan, March 10, 2022. REUTERS/Kim Kyung-Hoon
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LONDON, May 20 (Reuters) – The trillions wiped off global markets in recent weeks has triggered a contrarian ‘buy’ signal from BofA’s closely-followed ‘Bull & Bear’ sentiment indicator, while emerging markets are seeing their toughest time since the peak of the COVID crash.
Fears that inflation and fast-rising rates will send major economies into recession have sent global markets in a downward spiral with global equities (.MIWO00000PUS) losing close to 18% since the beginning of the year. It is the worst start to a year on recent record.
BofA’s analysts said their ‘Bull & Bear’ indicator had now moved into “unambiguous contrarian buy territory”, given the huge redemptions in developed market stocks, riskier high-yield debt and emerging market bonds.
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The week saw the largest ouflows from emerging markets debt since March 2020 and the biggest withdrawals from high yield bonds in 14 weeks, at $6.1 billion and $4.3 billion respectively BofA noted, citing EPFR data.
Across the equity space, Europe, which is being hit hardest by the Russia-Ukraine war, suffered a fourteenth week of withdrawals.
All in all, $5.2 billion exited world equities funds, while a seventh week of outflows from global bond funds saw $12.3 billion leave.
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Reporting by Julien Ponthus, editing by Marc Jones
Our Standards: The Thomson Reuters Trust Principles.