Daily Management Review

Hopes For A Rate Cut And Weak Us Economic Data Drive Inflows Into Global Equities Funds


Hopes For A Rate Cut And Weak Us Economic Data Drive Inflows Into Global Equities Funds
In the seven days leading up to May 15, demand for global equities funds was robust for the third straight week. This demand was supported by a less positive U.S. employment report and lower-than-expected inflation numbers, which raised hopes that the Federal Reserve may start reducing rates this year.
According to statistics from LSEG, investors bought global equity funds for a net amount of $10.27 billion this week, up from net purchases of around $12.54 billion the week before.
Markets rapidly priced in at least two rate cuts this year as data released on Wednesday indicated that U.S. consumer prices were cooling. Later on, though, the excitement subsided as central bankers continued to exercise caution on inflation and a recent report revealed a tight labour market.
A healthy $5.78 billion was obtained by US equities funds, the highest weekly inflow in eight weeks. In contrast, inflows into European and Asian funds totaled $3.22 billion and $1.37 billion, respectively.
The industrial sector amassed over $732 million in sectoral funds, the most weekly inflow in the previous seven weeks.
Utility and financial sectors had increases of $412 million and $348 million, respectively, while IT saw a second weekly outflow of over $755 million.
In the meantime, inflows into global bond funds were around $5.58 billion, up from net purchases of $13.41 billion the week before.
Investors flocked to government bond funds, which led the way by almost $1.78 billion, the most in the previous seven weeks. $1.26 billion was also drawn into high-yield funds, while around $986 million was pulled out of medium-term bond funds denominated in dollars.
Concurrently, money market funds had their first outflow of $20.42 billion in three weeks.
Precious metal funds saw a $234 million weekly inflow among commodities, marking the first in three weeks of gains. Energy funds, on the other hand, had net selling of around $74 million.
Data including 29,558 emerging market funds revealed a healthy net buy of $1.53 billion in stocks, the most since December 27. About $134 million was also drawn to bond funds, ending a four-week selling skid.