After coronavirus-led growth concerns paused the markets’ momentum in mid-January, global equities declined 3.8% over the last two weeks of the month. January marked the first monthly fall for global equities since August 2019.
Now, growth expectations are being reset and risk assets (i.e., stocks) are being repriced—but that’s it. The rally has been paused, not stopped. The recent downturn is all about a scare that impacts the consumer—the largest part of our global economy and the one pillar bearing the majority of the load after trade tensions created fissures in manufacturing.
Asset class exchange traded funds flows: Equity and bond flows were seasonally strong, but investors showed signs of de-risking
With global equities registering seven new all-time highs to start off January,1 investor sentiment was considerably positive prior to the late-month sell-off. As a result, flows were stronger than normal into equities. Historically, January is one of the weaker months in terms of fund flows, averaging only $3 billion over the last 20 years. The $20.6 billion amassed by equity ETFs in January 2020 is roughly six times greater than that 20-year average.