LONDON The biggest inflow into European equity funds since 2015 helped drive a $21 billion (16.39 billion pounds) inflow into global equity funds in the latest week, the largest since the U.S. presidential election in November, Bank of America Merrill Lynch said on Friday.
The resumption of 'risk on flows' following the first round of voting in France's election and in anticipation of a U.S. tax reform package boosted the increase in global stock market capitalisation so far this year to $3.3 trillion, BAML said.
Much of this year's stock market rally across the globe is down to a $1 trillion "liquidity supernova" of financial assets that central banks in Europe and Japan have bought so far this year, it added.
"The bull market is unlikely to end until bullish macro (data) makes central banks tighten (monetary policy) - we're not yet there," BAML said in a regular 'Flow Show' note this week titled: "It's Back On".
Investors poured $2.4 billion into European equity funds, the most since December 2015, and $13.8 billion into U.S. funds, the most in 19 weeks, BAML said.
Global stocks .MIWD00000PUS hit a record high this week, with major indices such as the Nasdaq .IXIC hitting fresh peaks and France's CAC 40 .FCHI reaching a nine-year high.
European economic data and corporate earnings have continued to come in on the strong side, and there's a growing consensus that the flow into the continent's stock markets will gather pace.
Bond funds attracted $10.9 billion of inflows in the week to Wednesday, with more than half of that ($5.6 billion) going into investment grade funds and a further $2.1 billion into emerging market debt funds, BAML said.
(Reporting by Jamie McGeever; Editing by Susan Thomas)