Bank of America Warns of Potential Stock Market Sell-Off
Global stock markets face uncertainties as $7.42 billion exits US equities amid high volatility.
Bank of America has issued a warning regarding the potential for a significant sell-off in global equities in the near future.
The alert comes after stocks reached new record highs last week, raising concerns over a market that may be experiencing overbought conditions.
Michael Hartnett, the bank's chief investment strategist, noted that the global market has demonstrated a substantial uptrend, with stocks climbing 20% in just two months.
This surge has heightened fears of market saturation.
In statements made to financial news outlets, Hartnett highlighted that numerous technical indicators, including fund flow data, reveal a marked shift towards riskier assets recently.
He pointed out that the stock market is nearing levels of excessive buying, with about 84% of indices across various countries trading above their 50-day and 200-day moving averages.
Technical analysis typically signals a sell-off when this figure approaches 88%.
Simultaneously, US equity funds have witnessed net outflows for the third consecutive week amid uncertainty and anticipation surrounding President Donald Trump’s trade policies.
Data indicated that US equity funds experienced net outflows of $7.42 billion for the week ending June 4.
Conversely, European equity funds attracted $2.72 billion in capital, while Asian equity funds garnered $1.84 billion during the same period, indicating a shift in investor interest towards markets outside of the United States.
Despite the outflow from US equities, investors continued to pour a net $667 million into sector funds on Wall Street for the second week running.
The technology sector recorded a total of $909 million in investment flows, while the industrial sector attracted $878 million.
This was contrasted by outflows of $800 million from healthcare and financial services sectors.
On a different note, global bond funds saw significant net inflows totaling $16.17 billion, while weekly flows into money market funds reached their highest levels in five months, amounting to $108.5 billion.
Additionally, investors directed $1.69 billion into gold and precious metals funds, marking the highest capital inflows to these funds in the past seven weeks.
The alert comes after stocks reached new record highs last week, raising concerns over a market that may be experiencing overbought conditions.
Michael Hartnett, the bank's chief investment strategist, noted that the global market has demonstrated a substantial uptrend, with stocks climbing 20% in just two months.
This surge has heightened fears of market saturation.
In statements made to financial news outlets, Hartnett highlighted that numerous technical indicators, including fund flow data, reveal a marked shift towards riskier assets recently.
He pointed out that the stock market is nearing levels of excessive buying, with about 84% of indices across various countries trading above their 50-day and 200-day moving averages.
Technical analysis typically signals a sell-off when this figure approaches 88%.
Simultaneously, US equity funds have witnessed net outflows for the third consecutive week amid uncertainty and anticipation surrounding President Donald Trump’s trade policies.
Data indicated that US equity funds experienced net outflows of $7.42 billion for the week ending June 4.
Conversely, European equity funds attracted $2.72 billion in capital, while Asian equity funds garnered $1.84 billion during the same period, indicating a shift in investor interest towards markets outside of the United States.
Despite the outflow from US equities, investors continued to pour a net $667 million into sector funds on Wall Street for the second week running.
The technology sector recorded a total of $909 million in investment flows, while the industrial sector attracted $878 million.
This was contrasted by outflows of $800 million from healthcare and financial services sectors.
On a different note, global bond funds saw significant net inflows totaling $16.17 billion, while weekly flows into money market funds reached their highest levels in five months, amounting to $108.5 billion.
Additionally, investors directed $1.69 billion into gold and precious metals funds, marking the highest capital inflows to these funds in the past seven weeks.
