“Zero capitulation in equity positioning” despite selloff -BofA

LONDON (Reuters) – Investors are undeterred by the recent selloff on Wall Street and have continued to snap up stocks, BofA commented in its weekly flow show report which showed $17.1 billion were poured into equities on a weekly basis.

“Note zero capitulation in equity positioning”, the research note read, adding that year-to-date, $84 billion has poured into markets and only 2 out of the 18 trading days this month had seen investors withdraw cash.

The U.S. Federal Reserve’s decision to start tightening monetary policy to fight inflation has hit global markets hard with New York’s S&P 500 index losing 9.2% since the beginning of 2022.

The “Fed can’t cut inflation on Main St without deflation on Wall St”, BofA analysts argued, saying they remained bearish in regards to the direction of travel for stocks.

Among notable flows in financial markets, the report showed that the week to Wednesday had seen the largest outflow from bonds since March 2021 and the largest inflows to emerging markets equities since the same date.

BofA’s ‘private clients’ -which manage $3.2 trillion of assets – had 11.7% in cash and were net buyers of stocks for eight consecutive weeks.

(Reporting by Julien Ponthus; Editing by Saikat Chatterjee)