Global equity funds rack up robust weekly inflows on rate cut bets
2024.06.07 08:39
(Reuters) – Global investors returned to equity funds in the seven days to June 5, powered by optimism that major central banks would cut interest rates as inflation moderated, while a drop in U.S. bond yields also lifted risk sentiment.
Investors pumped in a net $8.9 billion into global equity funds during the week, in contrast to about $4.4 billion worth of net withdrawals a week ago, data from LSEG showed.
This week, the European Central Bank and Bank of Canada cut their interest rates, boosting global stocks to record highs.
Investors are now waiting for the U.S. Federal Reserve’s meeting scheduled for next week for insights about the potential rate cuts this year.
Boosting investor sentiment, Treasury yields slid. The yield on benchmark U.S. 10-year notes hit a two-month low of 4.275% on Wednesday.
European equity funds saw $3.2 billion worth of net buying, marking the sixth weekly inflow in a row. Asian and U.S. equity funds, meanwhile, witnessed about $3.09 billion and $2.29 billion worth of net purchases.
Among sectoral funds, utilities received a robust $996 million, the biggest since May 2022. Metals & mining, and financials also added $459 million and $424 million, respectively.
Simultaneously, global bond funds drew roughly $14.56 billion, the largest amount in a week since March 5.
Global short-term bond funds led the way, gaining about $2.09 billion worth of inflows in a fifth straight week of net buying. Global government, and high-yield bond funds, meanwhile, secured about $1.6 billion each in inflows.
At the same time, money market funds observed about $61.2 billion worth of inflows, the largest weekly net purchase since April 3.
In the commodities segment, investors bought about $420 million worth of precious metal funds following a $608 million worth of weekly net selling. Energy funds also witnessed about $160 million worth of net purchases, the first in five weeks.
Data covering 29,547 emerging market funds showed equity funds gained inflows for a fifth successive week, valued at about $861 million on a net basis. Bond funds, meanwhile, saw $769 million worth of net purchases.
