Investors ignore rate hike fears to stock up on stocks – BofA

A worker arrives at his office in London’s Canary Wharf business district on February 26, 2014.//File Photo

LONDON, Oct. 22 (Reuters) – Equity funds recorded their biggest influx in five weeks as investors bet worries about persistent inflation could be overblown and therefore central banks will remain in accommodative mode, according to a weekly review of BofA. Friday.

In the week to Wednesday, investors invested $ 24.5 billion in stocks and $ 5.7 billion in bonds, while withdrawing $ 0.2 billion from gold and $ 4.2 billion from gold, respectively. cash, said BofA, who calculates the numbers from EPFR data.

Wider investment flows went into sectors that would be best protected from any surprise interest rate hikes, such as financial services, bank loans, and inflation-protected US securities. Inflows into credit funds have stagnated.

“Investors don’t fear the Fed or other central banks and don’t believe central banks are getting hawkish,” analysts led by Michael Hartnett, the bank’s chief investment strategist, said in the note.

BofA analysts noted that the UK base rate, which stands at 0.1%, is currently the lowest in 300 years. Some investors believe that a 15bp rate hike expected by the markets for this year would be a “policy error”.

Analysts also noted that Turkey’s massive 200 basis point rate cut on Thursday was the central bank’s 1,000th rate cut since the Lehman Brothers bankruptcy in 2008.

BofA’s Bull & Bear indicator rose a notch to 5.2, in the middle of the range, but remained well below a peak of 7.2 reached in January 2020.

Reporting by Saikat Chatterjee; Editing by Tommy Wilkes

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