Stocks enjoy record inflows as gold loses lustre on vaccine trade: BofA

LONDON (Reuters) – Investors stepped up buying of riskier assets such as stocks last week while pulling money out of safe-haven gold, BofA said on Friday, as major vaccine breakthroughs extended hopes that economies could move closer to normality in 2021.

FILE PHOTO: A man walks past the New York Stock Exchange in the Manhattan borough of New York City, two days after the 2020 U.S. presidential election, New York, U.S., November 5, 2020. REUTERS/Carlo Allegri/File Photo

World stocks hit fresh highs in December after best-ever monthly gains on hopes of a swift vaccine-driven economic recovery next year. BofA expects global gross domestic product to rise 5.4% in 2021, the strongest gain in nearly half a decade.

A record $115 billion was poured into equity funds in the past four weeks, the U.S. investment bank said, citing data from EPFR. Equity funds saw $9.7 billion of inflows for the week ending Dec 2.

Safe-haven gold, by contrast, has seen $9 billion in outflows in the last three weeks.

The past 10 months has been characterised by the “quickest bear market of all-time… greatest policy panic of all-time… greatest Wall Street rally of all-time,” BofA said.

Vast government spending and central bank stimulus have also raised expectations for a return of inflation from its decade-long slumber. That helped Treasury inflation-protected securities (TIPS) attract $2 billion last week, the second-largest weekly total.

BofA also noted the “dollar debasement” theme, saying should the dollar index dip below 90, there could be a disorderly drop in the world’s top currency and lead to disorderly jump in U.S. Treasury yields and a likely pop in speculation in bitcoin. The index against other major currencies was at 90.567 on Friday.

A dramatic post-summer decline in dollar has coincided with a spectacular rally in bitcoin, which has risen nearly 170% this year to record high levels.

Graphic: Bitcoin’s 2020 rally versus dollar –

Reporting by Thyagaraju Adinarayan; Editing by Tommy Wilkes and Kim Coghill

Source link

Add a Comment