Investor sentiment is shifting as U.S. equities face outflows while Japanese and European stocks attract fresh capital. A recent report by BofA Global Research reveals changing dynamics in global portfolio allocations.
U.S. Stocks See $8.9 Billion Weekly Outflow
In the week ending Wednesday, U.S. equities experienced $8.9 billion in outflows, according to BofA’s analysis of EPFR data. While significant, this trend follows a period of strong inflows since the 2024 election. BofA noted that for every $100 that flowed into U.S. equities post-election, $5 has exited over the last three weeks.
Japan and Europe Benefit from Global Diversification
Investors appear to be rotating capital into international markets. Japanese equities posted their strongest inflow since April 2023, totaling $4.4 billion. European shares also drew in more than $3 billion, underscoring a diversification away from U.S.-centric holdings.
Foreign Investors Still Active in U.S. Markets
Despite headline outflows, BofA reported nearly $4 billion of U.S. stock purchases by foreign investors. While there was minor foreign selling of U.S. Treasuries, this followed six weeks of steady inflows, suggesting no mass exodus of foreign capital.
Trump’s Tariff Move and Treasury Selloff
The sharp outflow from U.S. Treasuries—$4.5 billion, the largest since late 2023—comes amid concerns stirred by President Donald Trump’s April 2 tariff announcement. The market is closely watching whether such policy shifts might trigger broader foreign selling of U.S. assets.
Is This a Temporary Rebalance or a Longer-Term Shift?
While investors continue reallocating portfolios globally, it remains unclear whether these movements signal a short-term reaction or a deeper strategic change. As macroeconomic uncertainties rise, will the U.S. maintain its dominance in global capital markets?
