The global markets for "unambiguous contrarian buying territory," Bank of America says – Reuters.com

A man wearing a protective mask, amid the coronavirus disease (COVID-19) outbreak, walks past an electronic board displaying Nikkei Index charts (top) outside a brokerage in Tokyo, Japan, on March 10, 2022. REUTERS/Kim Kyung-Hoon

LONDON, May 20 (Reuters) – The trillions of dollars wiped out in global markets in recent weeks have triggered a “buy” signal against the bull & bear sentiment indicator closely watched by BofA, while emerging markets are experiencing their toughest time since the peak of the COVID crisis.

Fears that inflation and rapidly rising rates could send major economies into recession have sent global markets into a downward spiral, with global equities (.MIWO00000PUS) losing nearly 18% year-to-date. This is the worst start to the year on record recently.

BofA analysts said their “Bull & Bear” indicator has now entered “unambiguous contrarian buying territory” given the huge buybacks in developed markets equities, high-yield debt riskier and emerging market bonds.

The week saw the largest emerging market debt outflows since March 2020 and the largest high-yield bond outflows in 14 weeks, at $6.1 billion and $4.3 billion respectively, a noted BofA, citing data from EPFR.

In the equity space, Europe, which is hardest hit by the Russian-Ukrainian war, suffered a fourteenth week of drawdowns.

A total of $5.2 billion left global equity funds, while a seventh week of outflows from global bond funds saw $12.3 billion leave.

Reporting by Julien Ponthus, editing by Marc Jones

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