£4trn wiped off stock market in 2016

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A total of $5.7trn (£3.9trn) has been wiped off the stock market in the nine trading days so far this year.

The $5.7bn is the GDP of the UK and France combined, says Bank of America Merrill Lynch. Volatility in stock markets, largely sparked by the turmoil in China markets and it’s knock-on effect to the rest of the globe, has led to the stock market rout.

Merrill Lynch analysts say that “clients are no longer in ‘denial’ about recession/bear market risks”. The note from analysts says clients are “not yet willing to ‘accept’ we are already well into a normal, cyclical recession/bear market”.

In the first nine days of trading, equity markets saw their largest outflows for 18 weeks, with $12bn coming out of equity markets.

Equity funds have been hit, as well as direct stock holdings, with $21bn of outflows in the period. That compares to the $36bn of equity fund outflows seen during August’s China turmoil last year.

Meanwhile, investors retrenched to bonds, which saw $2bn of inflows in the period, while money market funds saw $24bn of inflows.