Global money market funds see largest inflows since March amid US downgrade, economic woes

(Reuters) – Global money market funds attracted massive inflows in the week to Aug. 2 as investors sought safer assets amid a U.S. credit downgrade and weak economic data from the euro zone and China.

Investors poured in a net $67.52 billion into global money market funds during the week, marking the biggest weekly net purchase since March 22, according to Refinitiv Lipper data.

Investor caution was sparked after rating agency Fitch unexpectedly cut the United States’ top-tier sovereign credit rating to AA+ from AAA on Tuesday, citing fiscal deterioration.

Reports this week showed a sharp contraction in factory activity in Europe and a slowdown in manufacturing activity in China, tempering investors’ expectations about global growth.

The U.S. and the European money market funds drew $58.56 billion and $14.35 billion worth of inflows, respectively, while Asia faced a second weekly outflow, amounting to $360 million.

Riskier global equity funds still received inflows worth about $4.45 billion in a second straight week of net purchases.

Most equity sector funds, however, booked outflows, with investors withdrawing a net $490 million, $468 million and $318 million, respectively, from utilities, healthcare and tech sector funds.

Global bond funds received $2.98 billion, their smallest weekly inflow in six weeks.

Global government bond funds attracted $2.02 billion, the biggest in three weeks, but high-yield bonds faced outflows worth $749 million.

Data for commodity funds showed precious metal funds lost about $892 million in a tenth straight week of net selling. Investors also disposed of energy funds of about $82 million.

Data for 24,127 emerging market funds showed that investors withdrew about $487 million from bond funds after eight straight weeks of net purchases. Equity funds, however, received about $196 million worth of inflows.

Source link