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RETAIL TRADERS SHY AWAY - JPM

JPMorgan strategists led by Arun Jain reported on Thursday that for the first time this year, retail investors are showing persistent signs of weakness with weekly purchases decelerating by about 30% after earlier going against typical seasonal patterns to make February their third-biggest month on record.

With uncertainty abounding due to the Middle East war, retail investors reduced their weekly ETF inflows by 22% and in doing so, broke a roughly three-month streak of steady support.

They also pared back on single-stock buying to the deflated moderate flows JPM had observed in the past two to three weeks. And JPM pointed to Monday as the largest net-selling day in single stocks in a month. Retail investors did resume purchases on Tuesday and Wednesday but below the average year-to-date pace.

While investors were positive on megacap technology stocks, including Oracle ORCL.N, before and after its earnings report, the strategists wrote that they cut back exposure to energy names.

Still retail investors continued to favor AI, buying technology and consumer discretionary stocks this week, including Nvidia NVDA.O, Broadcom AVGO.O, Microsoft MSFT.O, Tesla TSLA.O and Palantir PLTR.O. And as software rebounded, retail continued to buy the momentum in software names they had bought on weakness earlier this year.

They sold most sectors against AI, according to JPM, which pointed to the heaviest selling in energy stocks including Exxon Mobil XOM.N. They said that the behavior was similar to investor moves in 2022 during the Ukraine‑Russia conflict, with an initial few weeks of buying energy stocks and ETFs followed by a brief turn negative, which was then followed by a return to net buying as the conflict unfolded.

So by the numbers, in the week ending March 11, retail flows declined to $6.7 billion, which was below the 12-month average of $7.1 billion per week and retail investors continued to favor ETFs (+$6.3 billion) versus single stocks (+$0.4 billion).

(Sinéad Carew)

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