FILE PHOTO: Traders work on the ground on the New York Stock Exchange (NYSE) in New York, U.S., May 7, 2019. REUTERS/Brendan McDermid
LONDON (Reuters) – Global equities have seen outflows of $20.5 billion prior to now week as “trade deal trauma” pushed more cash into bonds, Bank of America Merrill Lynch stated on Friday, the newest signal of how rising international commerce tensions are roiling monetary markets.
U.S. President Donald Trump’s tweets on Sunday night time, threatening to boost tariffs on Chinese imports, upended the beforehand calm market and wiped roughly $2 trillion from international equities this week.
“Risk pullback since May 1st highs follows furious rally, initiated by less-dovish PBoC/Fed, accelerated by trade trauma this week,” the financial institution’s strategists stated, referring to central financial institution insurance policies of the People’s Bank of China and Federal Reserve.
The money leaving stocks within the week to May eight was the third largest outflow thus far this yr, the financial institution stated, and got here as Trump threatened additional import tariffs on Chinese items, ratchetting up the extended commerce spat between the world’s two largest economies.
U.S. equities had outflows of $14 billion, the most important since Jan. 30, BAML stated, citing knowledge from movement monitoring specialist EPFR. The S&P 500 has risen 14.5% year-to-date.
Investors, in search of shelter from the commerce dispute, stored pumping cash into bonds, which noticed inflows of $7.three billion, making it the eighteenth straight week of inflows.
“A trade war, with across-the-board tariffs on US-China trade, would push the global economy towards recession,” BAML warned in a separate notice to shoppers.
Reporting by Thyagaraju Adinarayan; Editing by Josephine Mason and Peter Graff