Global equity funds draw inflows for second straight week amid rate cut expectations
2024.07.05 07:56
(Reuters) – Global investors piled into equity funds in the week to July 3 on expectations of U.S. rate cuts following weaker economic indicators and dovish remarks from Federal Reserve Chair Jerome Powell.
According to LSEG data, investors scooped up a net $15.41 billion worth of global equity funds during the week after about $21.08 billion worth of net acquisitions in the prior week.
Subdued U.S. economic reports on the manufacturing and services sectors earlier this week, along with jobs data indicating easing labour market conditions, raised hopes about a potential Federal Reserve rate cut in September.
A softer reading on U.S. inflation last week, also boosted investor sentiments. Fed Chair Jerome Powell said on Tuesday that the U.S. was back on a “disinflationary path”, reinforcing expectations about upcoming rate cuts.
U.S. equity funds attracted $8.62 billion in new money, while European and Asian funds drew $3.81 billion and $2.34 billion, respectively.
Among sectoral funds, the technology sector received $810 million, a fourth weekly inflow in a row. Financials and communication services also witnessed $587 million and $201 million worth of net investments.
Global bond funds experienced about $12.18 billion worth of inflows on a net basis as investors extended purchases to a 28th successive week.
Corporate bond funds attracted $1.99 billion, the largest amount in a week since June 12, while government bond funds secured $1.98 billion, a ninth weekly inflow in a row.
Investors, meanwhile, pumped a robust $50.6 billion into money market funds, the highest in four weeks.
In commodities funds, weekly net purchases in precious metal funds stood at a three-month high of $624 million. Energy funds, however, suffered outflows for the fourth week in a row, worth approximately $69 million.
Data covering 29,509 emerging market funds showed equity funds saw $288 million worth of net purchases, the second weekly inflow in a row. Bond funds, meanwhile, witnessed outflows for a fourth successive week, amounting to a net $1.35 billion.
