LONDON (Reuters) – Since trillions of dollars have been wiped off global markets in recent weeks, BofA’s closely watched “Bull & Bear” sentiment indicator sent a “buy” signal in the opposite direction. Meanwhile, emerging markets are going through their worst time since the peak of the COVID crash.
Fears that inflation and quickly rising rates will send major economies into recession have sent global markets into a downward spiral. Since the beginning of the year, global equities have lost close to 18 percent. It’s the worst start to a year that anyone can remember.
Analysts at BofA said that their “Bull & Bear” indicator had moved into “unambiguous contrarian buy territory” because of the large redemptions in developed market stocks, riskier high-yield debt, and emerging market bonds.
Withdrawals of $6.1 billion from emerging market debt and $4.3 billion from high yield bonds were the largest since March 2020 and 14 weeks, respectively, according to data from EPFR, which BofA used.
Europe, which is being hurt the most by the war between Russia and Ukraine, saw withdrawals for the fourteenth week in a row.
In total, $5.2 billion left world stock funds, and $12.3 billion left global bond funds for the seventh week in a row.