Investors Kick Off 2024 With $123 Billion Record Cash Shift

Investors Kick Off 2024 With $123 Billion Record Cash Shift

Investors have started off the year 2024 with a bang, as they invested a record $123.1 billion into cash in the first week of the year, the largest such inflow since March 2023, according to a report by Bank of America (BofA).

This shift in investment follows a year of record inflows to cash of $1.3 trillion in 2023, as risk-averse investors sought safe havens due to the pandemic and higher interest rates reduced demand for stocks.

BofA noted that this move to cash was typical for the first week of the year. However, investors also bought $10.6 billion worth of bonds and $7.6 billion of stocks, while shedding $0.8 billion of gold.

The past few weeks saw a continuation in inflows to equities, totaling $82 billion, with eight out of the past ten weeks seeing inflows, BofA added.

However, global equities are set to snap a nine-week winning streak as bets on aggressive central bank rate cuts were rolled back. The benchmark S&P 500 declined by 1.1% over Wednesday and Thursday, as investors grew nervous about expectations of near-imminent interest rate cuts from the Federal Reserve.

BofA’s bull & bear indicator, a measure of market sentiment, rose to 5.3 from 5.0, reaching the highest level since November 2021, although it remained neutral.

Energy stocks saw their seventh straight week of outflows, and U.S. small-cap stocks recorded a weekly inflow of $2.3 billion, their fifth weekly inflow in a row.

While a record cash shift has marked the beginning of 2024, it remains to be seen what the rest of the year holds for investors and the global economy.