Stock outflows rise as trade war risks “full-blown recession”

Markets were mixed on Wednesday.

The S&P 500 fell 0.9 percent, the STOXX Europe 600 rose 0.7 percent and the Nikkei 225 fell 0.3 percent.

The S&P 500 opened higher but subsequently reversed to close below its 50-day moving average amid continued concerns over trade tensions.

Dan Wantrobski, director of research at Janney Montgomery Scott, said that “we could see another correction cycle” and that while he did not expect a structural downturn, “tariffs and trade wars could exacerbate the weakness”.

Indeed, analysis by economists at Bank of America Merrill Lynch showed that “a major trade war would push the economy towards a full-blown recession”.

Meanwhile, some investors are already heading for the exit. According to the Investment Company Institute, stock outflows hit a three-month high last week.