Inflation, tightening of monetary policy and fear of recession are still current topics that have influenced the state of uncertainty in the markets. The American S&P 500 index ended the month with a fall of 8.39%, and the Nasdaq-100 with a fall of 8.71%.
The S&P 500 ended the first half of the year down nearly 21%, its biggest first-half loss in more than five decades, leaving the benchmark index firmly in "bear market" territory. While the stock market continuously broke new records in 2021, 2022 has so far been defined by a prolonged sell-off.
There are several reasons for this.
Fear of recession
Due to pressures on price growth, especially food and energy, as well as higher borrowing costs, the fear of recession is growing. Raising interest rates, a tool used by central banks to curb inflation, has contributed to falling stock valuations, along with concerns about the outlook for growth.
The biggest risk for the European economy is the reduction of gas supplies from Russia, which has significantly raised prices and raised fears of a complete shortage. In the US market, the most inflows were recorded by ETFs that track the S&P 500 Index, such as the Vanguard S&P 500 ETF and the iShares Core S&P 500 ETF, followed by ETFs that track the NASDAQ-100 Index, such as the Invesco QQQ Trust or those that track the entire market, such as the Vanguard Total Stock Market ETF.
The list also includes bond funds, such as Bloomberg Barclays 1-3 Month U.S. Treasury Bill Index and the iShares Short Treasury Bond ETF. Increased inflows were recorded by the Vanguard High Dividend Yield ETF, which invests in companies that continuously pay dividends.
Part of the investors focused on the Chinese market through the iShares MSCI China ETF. If you were to group the funds, you would notice that the most outflows were from bond funds. If we look at the funds individually, the largest outflow was from the JPMorgan BetaBuilders Europe ETF, which invests across the developed markets of Europe.
There was also an outflow of funds from the Financial Select Sector SPDR Fund, which invests in companies from the financial sector. The SPDR Gold Trust, which tracks the price of gold bullion, and the Vanguard Real Estate ETF, which invests in the real estate sector, were also on the list.