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Investors rush for the exit as stock market confidence crumbles

Investors rush for the exit as stock market confidence crumbles

'The Greatest Week of Redemptions Ever' is what analysts at Bank of America Merrill Lynch are calling it.

The Flow Show, their regular weekly charting of the movement of money around markets, highlights that investors withdrew a staggering $39 billion (£31 billion) from equity funds over the week.

The bulk of that was from US funds: $28 billion, to be precise, the second largest outflow on record, while $4.5 billion was pulled from European funds.

More bad news meanwhile arrives from Hargreaves Lansdown. The online stockbroker's regular survey of its customers reveals their confidence in the UK stock market has reached a new record low.

Having fallen to its lowest level since Hargreaves first began compiling the survey in 1995 in September, 'Red October' brought a further decline. After November's brief uptick in sentiment, December's reading markets a new record low.

'Any element of festive cheer is distinctly missing from investor sentiment, and little wonder given proceedings at Westminster,' said Laith Khalaf, senior analyst at Hargreaves Lansdown.

'The political uncertainty surrounding Brexit continues to cast a long, dark shadow over investor confidence, which is significantly lower than even during the depths of the financial crisis.

'The ongoing trade spat between the US and China isn’t exactly relaxing background music either, and is serving to further unsettle investors.'

Despite all that gloom, it's not actually been a bad week for UK investors, as our exclusive Accumulator data table shows.

A weak pound, dragged down by Brexit uncertainty, has helped, boosting the overseas earners on the FTSE 100 and driving the index to a 2.6% gain over the week to yesterday.

Returns from overseas markets meanwhile look rosier thanks to the pound's fall, although even the dollar's 1.3% rally against sterling wasn't enough to lift UK investors' returns from the US stock market.

As the year draws to a close, the Accumulator tells the story of a choppy year for stock markets, most of which are unlikely to lift themselves out of the red in the remaining nine trading days.

World stock markets have just about delivered a positive return in pound terms, but that's thanks to sterling's fall over the year, and the US stock market's dominance of the global index. 

Most other global markets are in the red, in a year when bonds have beaten shares.

You can access the Accumulator here.

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