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Caveat Emptor from the AFR

https://www.afr. com/markets/equity-markets/asx-braces-for-capitulation-after-9trn-wiped-from-wall-street-20250406-p5lpkq

ASX braces for capitulation after $9trn wiped from Wall Street
Jonathan ShapiroSenior reporter
Apr 6, 2025 – 6.30pm


Excerpt:
….
Last week, hedge funds sold the largest volume global stocks ever, according to analysis by brokers at Goldman Sachs, heading into Friday’s record session, mainly through short selling rather than exiting long positions.
The large mutual funds that had avoided panic selling until last week were also selling calmly on Thursday – but less so on Friday. These funds had run down their cash balances to take advantage of cheaper technology, financial and industrials stocks but were instead forced to sell.

Meanwhile, retail investors who stormed the market earlier in the week in the hope of snapping up bargains were forced into a dramatic retreat.
On Thursday, retail investors bought $US4.7 billion of stocks, the most in a decade according to JPMorgan. But on Friday they were stung with margin calls and dumped $US1.5 billion, the largest selling volume on record.
“This is another sign ‘I need to sell anything to satisfy my margin calls”, said Mizuho’s Azami. “Very seldom you see copper and commodities take beat downs like this. They were ‘safety’ plays two weeks ago.”

Investors are split on whether the sharp falls on Wall Street, and the ASX, represent an opportunity to buy stocks, or whether there will be prolonged pain as the repercussions of the White House’s trade policies unfold.
“The hope was that after the tariff announcement was behind us the market would have more clarity, and it would free up investors to actively trade and potentially play some offence,” said Goldman Sachs’ head of American equities sales John Flood.
“Hope is not a strategy.”…..


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