EBC Markets Briefing | Hedge funds fled US stocks on Trump fears

The S&P 500 posted a modest weekly gain, snapping a four-week streak of declines. The index fell into a correction earlier this month by ending down over 10% from its February record high.

A number of reports in the coming week will give a fresh read into the economy, including releases on consumer confidence, after the Fed downplayed recession risks at last week's meeting.

The recent ructions for both US stocks and the greenback came as Trump's tariff game has shaken global financial markets and sparked concerns about the trajectory of the world's biggest economy.

Hedge funds added more bearish positions than bullish ones in March than at any time since 2020, doubling down on bets that US stocks have further to fall, according to a Goldman Sachs note.

Their exposure to tech and media stocks hit a five-year low, with some now shorting the sector, while others have added bearish bets on AI-related shares. Nvidai was down over 12% year to date.

However, this dynamic was not apparent in Europe and Asia, where hedge funds simply exited losing trades and stayed away from them, the bank added.

The S&P 500 was stuck in a tight range in the past week, so the risk is tilted towards the downside as it is trading around the upper end of the range.

EBC Wealth Management Expertise Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC Group Corporate News or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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