Investors have jumped back into stock funds as trade tensions with China showed signs of easing, reversing a long stretch of outflows.
Global equity funds saw $14.4 billion in inflows in the week ended Wednesday, the most since March 2018, according to a Bank of America Merrill Lynch analysis of EPFR Global data. That follows seven consecutive weeks of outflows.
After a volatile August that rattled stock and bond markets, major U.S. stock indexes have climbed for three consecutive weeks, putting the Dow Jones Industrial Average and S&P 500 within about 0.6% of their all-time highs. A thaw in trade tensions with China and hopes for central-bank stimulus have led to investors’ surge in optimism.
“I think there’s a host of things that have come together in the last two to four weeks that at a minimum could have investors revisiting whether they should be as bearish on stocks and bullish on bonds as they’ve been,” said
chief investment strategist for Leuthold Group.
Investors also added $5.4 billion to bond funds in the latest week, according to the BofA Merrill Lynch analysis.
After dropping for much of August, government-bond yields around the world have risen in recent sessions. The yield on the 10-year Treasury note capped off its biggest one-week yield gain since June 2013, rising to 1.901% Friday.
“We have a tremendous rotation going on in the market,” said
macro strategist with JonesTrading.
Investors also pulled $800 million from gold funds, suggesting an increased appetite for risk. Gold prices are down nearly 4% since hitting a six-year peak earlier in the month.
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