Investors are buying European stocks at the fastest pace in almost a year. Meanwhile, inflows into U.S. equities have been sluggish amid recession fears. A report by Bank of America (BofA) showed.
European equity funds received $3.4 billion in inflows in the week ending Friday, according to the report, which strategists including Michael Hartnett cited EPFR Global data. It is the largest since February last year, but it is only the second week of inflow after 48 consecutive weeks of outflow. $7.9 billion flowed into emerging market equities. Meanwhile, U.S. stocks saw their first inflow in four weeks, but only $300 million.
Source: Bloomberg
Earlier this year, Hartnett said he expects U.S. stocks to underperform the rest of the world. Wall Street strategists have also become more bearish on U.S. stocks, given the prospects for interest rates, the economy and corporate earnings.
BofA strategists said in a note dated June 26 that there are several signs that the U.S. economy will have a “hard landing” in 2023. The condition for the U.S. economy to enter a recession is that financial conditions will tighten further this spring, he said.
Strategists called the S&P 500 a “sell” after it hits the 4100-4200 range, up 3.4% from current levels, at a level where “high stocks start pushing yields higher.”
Original title:BofA Says Investors Flock to European Stocks, Leaving US Behind(excerpt)