U.S. large-cap stocks experienced their biggest weekly outflows since December 2022 in the week ending Wednesday, April 10, according to Bank of America.
Traders expressed nervousness about ongoing inflation pressures that could delay rate cuts, coupled with geopolitical tensions adding to market caution.
US large-cap companies saw outflows totaling $15.8 billion over the week, contributing to overall outflows from equities of $19.6 billion. Bank of America’s weekly report, based on EPFR data, highlights investor concerns about recent market events.
The market’s reaction to the inflation data led to a re-estimation of expectations for a rate cut by the Federal Reserve, with markets moving the expected schedule from June to September, albeit with price volatility.
Japanese stocks experienced their first weekly outflow in more than three months. Despite these outflows, major stock markets in the US, Japan and Europe continue to trade at or near record highs.
The Bank of America report highlights the prevailing sentiment in favor of assets other than bonds, driving demand for inflation hedges such as gold, which is also near record highs.
“It’s rare for technology and commodities to be both the most expensive yet at 1999 levels,” Bank of America strategists wrote in a note.
Strategists also noted that the current environment favors inflation and higher capital costs until a recession leads to a shift in investor sentiment toward bonds.