It’s hard to find a more bullish start to a year than this one. There were “blockbuster” inflows of capital into stocks, as well as corporate and emerging markets bonds, according to the latest analysis by Bank of America Merrill Lynch.
Equities saw their largest inflows in 11 weeks in the week that ended on June 3, with the contrarian “buy” signal triggered in early January still in place, data from Bank of America Merrill Lynch showed.
Volatility has been high in stock markets, with equities oscillating wildly between deep losses on Friday and a relief rally on Monday, but a contrarian “buy” signal is still in place, a recent sentiment indicator showed.
Some commentators have warned that a bear market in stocks could be near, citing things like the fall in US long-term interest rates or the decline of volatility as a sign of investor complacency.
But Garry Evans, global head of equity strategy at HSBC, argues that actually, a bear market usually starts when long-term interest rates and volatility are rising – although they are not necessarily reliable indicators.
There was a larger share of emerging market investors who felt they were under-invested in the asset class in February compared with a previous survey, possibly signalling a positive change for emerging markets, a survey by Societe Generale showed.