Investors pull money out of US stock

NEW YORK: Investors cautiously pulled money from US stock and junk bond funds over the past week, as the US and China struggled to finalise a potential trade truce. Funds focused on buying US equities suffered just over $400m in withdrawals for the week ending November 13, according to data from EPFR Global, clipping two consecutive weeks of inflows that had added up to about $7bn since a potential deal between Washington and Beijing took root.

Investors also pulled $658m from funds invested in US high-yield corporate bonds, ending four weeks of inflows. A possible end to the trade war between the US and China stumbled this week, with the talks stuck over intellectual property rights and China's purchases of US agricultural products. Andrew Brenner, head of international fixed income at National Alliance Securities, noted that the trade talks remained the "major issue" for financial markets. "And both bonds and stocks will continue to trade off that issue," he said. At risk is a potential uptick in the tariffs imposed on China by the US in December. US president Donald Trump warned this week that levies could increase substantially on December 15 if the two sides fail to reach an agreement.

Despite the setbacks, US stocks have continued to rally, with the S&P 500 index notching a fresh all-time high on Thursday, though nervousness over stalling trade negotiations could threaten the recent gains, said analysts. Jim Paulson, chief investment strategist at The Leuthold Group, said part of the reason for the outflows might also stem from the recent outperformance of international stock markets. Funds free to invest across global equity markets took in just over $5bn for the week ending November 13, according to EPFR data, while all equity funds received $9.7bn of fresh money.