US stocks see historic “bull crash” amid recession, trade war fears, with investors shifting towards long-term bonds and gold

There are more signs than ever before that interest in US equities has peaked, with a Bank of America survey showing investors have slashed their allocations by the most ever in March, the Financial Times reports. Investors raised their cash allocation from 3.5% to 4.1%, with the speed of the sell-off “consistent with end of equity correction,” Reuters reports. Some 70% of investors said the “US exceptionalism” theme prevalent in the first few months of the year following US President Donald Trump's inauguration is long gone.

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Tech stocks in particular are falling out of favor: The survey found that investors had moved to a net 12% underweight position on US tech stocks, the lowest allocation for more than two years. Shares in tech firms like Elon Musk’s Tesla continued to witness a sell-off yesterday, with the blue-chip S&P 500 closing yesterday 1.1% down, and the tech-heavy Nasdaq falling 1.7%. Tesla’s shares dipped more than 5%, while Nvidia’s shares fell 3.4%.

In context: Investors have turned bearish towards US stocks after being raging bulls for months earlier this year due to concerns over stagflation, trade tensions, and a potential slowdown in economic growth. Global growth expectations recorded their second-largest decline on record, according to the survey.

The US bond market is also seeing investors shift away from riskier assets amid recession fears and uncertainty over Trump’s tariff policies, Reuters reports separately. Investors have been extending bond duration for at least a month, positioning for lower yields. JP Morgan’s Treasury Client Survey revealed that long positions on treasuries are now at their highest level since 2010.

On the other hand, gold is having a much better week, with investors’ shift towards safe-haven assets pushing its price past the USD 3k mark yesterday for the second time this week, Reuters reports. The rally was fueled by a weaker USD and ongoing tariff uncertainty, as well as renewed tensions in the Middle East after Israel broke the ceasefire in Gaza with airstrikes yesterday, killing more than 400 people. Trump’s inauguration has also given gold a new impetus, with the asset hitting record highs 14 times, reflecting strong demand.

MARKETS THIS MORNING-

Asian markets are mixed this morning, with Japan’s Nikkei and Topix both up, along with South Korea’s Kospi, while China’s CSI 300 opened flat, and Hong Kong’s Hang Seng is down 0.25%. Over on Wall Street, little has changed in futures markets following yesterday’s losses.

THE CLOSING BELL-

The EGX30 rose 0.5% at yesterday’s close on turnover of EGP 4.8 bn (37.9% above the 90-day average). Local investors were the sole net sellers. The index is up 6.3% YTD.

In the green: Egypt Aluminium (+7.4%), Palm Hills Developments (+7.0%) and Ibnsina Pharma (+6.3%).

In the red: Juhayna Food Industries (-2.7%), Alexandria Containers and Goods (-1.9%), and Emaar Misr (-1.7%).

CORPORATE ACTIONS-

Al Baraka Bank’s Ordinary General Assembly approved distributing EGP 620 mn in dividends to shareholders for its 2024 earnings at EGP 0.85 per share, according to a disclosure to the EGX (pdf).