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The previous inflows into ETFs turned into outflows as investors grapple with the slowing China and US economy.
The strong February performance in the US stock market has led the S&P500 shy from its all-time high.
The lack of inertia where the benchmark has drifted lower towards the close in the past two trading sessions, created some cautions in the market.
The past couple of week’s rally has been a result of ignoring bad news and focusing on the M&A activities.
This appears to be the juncture where investors acknowledge poor US economic data and the reality of a slowdown. The US housing market, which was the beacon of light last year, has become a nervous issue after new homes sales showed declines and first-time home buyers were absent from the action.
The weather may have attributed, but if we dig deeper the revelation was the bulk buying last year, were it was mainly by institutions.
The slowdown in home price appreciation and the rising mortgage rates has added pressure. The other factor highlighting uncertainty is consumer confidence, which is dropping more than forecast in February from 79.4 to 78.1.
The bad news may have caused a pause in the bull market. It is not nearly a reversal of the trend. Given the heights the US equity markets are currently at, it is unsurprising for investors to be cautious. The valuation of US stocks is still shy of its peak back in 2009 and the S&P 500 trading is at 60%, below the current levels.
Asian indices will have to battle through the uncertainty of global growth. Any significant slowdown in demand from the US, Europe and China would have a direct impact on Asia.