LONDON: Bank of America Merrill Lynchs Bull Bear gauge of market sentiment has fallen to 1.8, a level US banks strategists describe as extreme bear territory that has triggered a buy signal for equities.This is first time buy signal for risk assets has been triggered since June 2016 when Brexit vote sent global markets spiralling lower, strategists said on Friday, adding it was time to buy.The note came as markets rallied strongly after blowout employment figures from United States lifted some investors concerns about slowing economic growth.BAML said global equities have tended to rise after their buy signal was triggered.
Their median performance following three months - in 15 occurrences since 2000 - has been 6.1 per cent.Investors should buy SP 500, Chinese stocks, German stocks, US small-caps, semiconductor and energy shares, US and European high-yield bonds and emerging currencies, all of which are very oversold, strategists said.They saw SP 500 rallying to 2,650 points.Global markets have had a torrid December and difficult start to 2019 as trading was marred by a slowing global economy, and multiplying signs of impact of a US-China trade war, most recent of which was a revenue warning from Apple Inc..In recommended sells, BAML pointed to US Treasuries, Japans yen and healthcare and utility stocks considered defensive.BAML strategists said global equities have lost $19.9 trillion in market value since their peak in January 2018, close to United States nominal gross domestic product, which stood at $20.66 trillion a year in third quarter of 2018.Citing data from flows tracker EPFR, BAML said past six weeks have seen record outflows from equities ($84 billion) and investment-grade bonds ($34 billion), while government bonds have seen inflows of $24 billion.