Investors still flock to cash as stocks hit record highs
Reuters
Published Feb 23, 2024 23:13
LONDON (Reuters) - Investors poured cash into money market funds at the fastest pace on record in the first weeks of the year, and funnelled another $15 billion into equities in the week to Wednesday, Bank of America (NYSE:BAC) Global Research said on Friday.
The BofA report showed the equity market rally is broadening beyond the mega caps, as U.S. small cap funds logged their largest weekly inflow in the week to Wednesday since June 2022, at $5.1 billion.
BofA said in its weekly roundup of fund flows in and out of world markets citing EPFR data, that flows to cash were running at an annualised rate of $1.3 trillion in the first weeks of 2024 through to Feb. 21.
Investors can often opt for cash when they are less confident, but with interest rates at elevated levels and looking less likely to drop in the very near term, cash-equivalent money market funds have drawn in flows.
In the latest week, as the S&P 500 hit record highs, investors put $15.2 billion into bonds, including $10.2 billion into investment-grade bond funds, which logged a 16th straight week of inflows, the longest such stretch since October 2021, BofA said.
The S&P this month topped the 5,000-mark for the first time ever, thanks to a surge in the so-called "Magnificent Seven" most valuable stocks that include the likes of Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and AI darling Nvidia.
BofA's "Bull & Bear" indicator remained at 6.6 for the latest week, tilting into "bullish territory", but the bank said this was not overly stretched.
On a scale up to 10, a reading above 6 is straying into bullish territory and below 5 is moving into bearish territory.
"Positioning (is) not yet at extreme bullish, but (it) won't take too long," BofA said in the report.
Last week was also the first time since September that both energy and raw materials funds registered a weekly inflow, according to the report.
Get The App
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.