LONDON (Reuters) – Investors switched to defensive equities and bonds within the week to July 11 because the U.S. slapped tariffs on $34 billion of Chinese imports and then raised the stakes by threatening one other spherical on an additional $200 billion of products.
Investors fear that a full-blown China-U.S. commerce battle might harm international exports, funding and progress, and have scrambled to take danger off the desk.
Bonds attracted inflows of $5.6 billion — their largest inflows in 12 weeks — knowledge from Bank of America Merrill Lynch (BAML) confirmed on Friday, whereas defensive fairness sectors corresponding to healthcare loved their largest inflows in a yr, pulling in some $800 million.
Overall, fairness funds attracted some $1.2 billion, with the United States pulling in $four.three billion, Europe $four.2 billion and Japan $1.9 billion.
Yet BAML famous that 34 MSCI fairness indices have been down year-to-date, and solely 11 have been up after a bruising first half for international markets.
Turkish equities are the most important faller, down 36.7 %, as buyers have grown involved by the outlook for financial coverage underneath President Tayyip Erdogan, who has moved shortly to cement his energy since profitable an election.
Other huge losers embrace Brazilian equities, down 15.three %, and South African shares, down 13.three %.
As an entire, rising equities are down 6.6 %, towards the underside of BAML’s cross-asset desk of winners and losers in greenback phrases. Perhaps not surprisingly then, rising market fairness funds suffered redemptions of $1.three billion in an eighth straight week of outflows.
But rising market debt funds loved their first inflows in three months, attracting a modest $900 million.
The lion’s share of the fastened revenue flows continued to go to funding grade bond funds, which pulled in $2.three billion, whereas excessive yield bond funds ended their nine-week drought, attracting $500 million.
Reporting by Claire Milhench; Editing by Toby Chopra