Investors brace for more market turbulence ahead CORONAVIRUS PANDEMIC
EQUITIES REVERSE MOMENTUM AMID RENEWED US-CHINA TRADE TENSIONS
Some investors are positioning for further turbulence by shunning value sectors such as energy and financials in favour of technology and health care.
Investors are preparing for more stock swings in the weeks ahead as economies try to reopen without fuelling a resurgence in coronavirus cases and global trade tensions rise.
“Global equities reversed momentum last week as heightened tensions between the US and China and early fears of a second wave of coronavirus infections took hold,” said Aditya Pugalia, director of financial markets research at Emirates NBD.
Although the market recently recorded its biggest rebound in decades, in other ways benchmarks have gone nowhere. A lack of an all-clear on the pandemic front, coupled with worrisome technical and sentiment indicators, led many strategists to believe the market was getting ahead of itself.
“There has been a lot of market chatter about the relative strength of equity markets despite weak economic data and dire near-term outlook; However,
there is growing evidence that the strength is coming from a select few stocks,” Pugalia added.
Some investors are positioning for further turbulence by shunning value sectors such as energy and financials in favour of technology and health care, two areas that have held up relatively well during recent market turmoil.
Investors pulled another $6 billion from equity funds in the latest week, according to fund tracker EPFR, taking the yearto-date net outflow to $40 billion. Meantime, an enormous $1.2 trillion has been moved out of risk assets and into money market funds. This clearly shows longer-term public investors in a defensive posture.