Investors’ sentiment seems to be turning negative in the overall, despite the fact that the S&P 500 index has been making gains recently and recovering its losses. Investors are not convinced, and they are moving their funds into more defensive and secure assets than shares.
Capital is fleeing away from equities
Recent statistics from Bank of America have revealed that investors have shifted their attention and moved their funds towards less risk-prone assets. Over $5 billion have been pulled out from stocks, and over $94 billion have been invested in bonds, in an attempt to weather an expected storm. Emerging markets received $21 billion, and high yield investments received over $12.8 billion.
Investors are anticipating a recession
Although the first quarter of this year has been positive for equities, there are many signs in the economy that indicate that a recession may be near. Investors are shifting their portfolios based on that expectation. The Fed’s comment that it would pause interest rate hikes further consolidated this prediction.
Investors are pulling away from equities and loans and buying fixed income assets like corporate bonds. Additionally, they are increasing the share of cash in their portfolios as risk-off sentiment kicks in.