Global equity funds draw 4th weekly inflow on hopes of Fed rate cut

Global equity funds attracted inflows for a fourth straight week through October 15, as dovish comments from U.S. Federal Reserve Chair Jerome Powell reinforced expectations that the central bank will cut interest rates at its meeting later this month.

Investor appetite, however, remained cautious amid renewed U.S.-China trade tensions after President Donald Trump indicatedhe may scale back certain trade ties with Beijing.

Investors bought a net $2.17 billion worth of global equity funds during the week in line with nearly $2 billion weekly net purchase the prior week, LSEG Lipper data showed.

The U.S. and Asian equity funds saw nearly $1 billion inflows each, while European funds had a net $1.62 billion weekly outflow which ended a 10-weeks-long trend of net purchases.

Equity sectoral funds, meanwhile, saw an uptick in demand as they received $6.61 billion, nearly a 50% rise from the previous week’s $4.39 billion net purchases.

Tech and healthcare sectors led the sectoral net investments as they received about $1.91 billion and $1.38 billion, respectively in weekly inflows.

Inflows into global bond funds, meanwhile, eased to a 16-week low as investors poured just $7.97 billion into these funds.

Demand for government bond funds, however, jumped to the highest in five months with a net $3.22 billion in weekly inflows. Investors also bought short-term bond funds of $2 billion but shed a net $1.08 billion worth of loan participation funds.

Investors, meanwhile, divested $6.72 billion worth of money market funds, partly liquidating prior week’s $64.46 billion net investments.

Gold and precious metals commodity funds drew $2.83 billion, the 20th weekly inflow in 21 weeks.

In emerging markets, investors ended their eight-week-long buying streak with a net $1.04 billion weekly divestment. Bond funds, meanwhile, saw a net $2.38 billion weekly inflow, data for a combined 29,687 funds showed.

U.S. equity funds saw renewed demand in the week to October 15 as signals of further rate cuts from Federal Reserve Chair Jerome Powell and a solid start to the corporate earnings season eased concerns over trade tariffs and a government shutdown.

LSEG data showed investors purchased a net $1.04 billion in U.S. equity funds, recouping nearly a quarter of the previous week’s $4.45 billion in outflows.

Stronger-than-expected quarterly results from Morgan Stanley and Bank of America also helped bolster risk sentiment following a week of withdrawals.

Investors pumped about $4.39 billion into U.S. sectoral funds, extending purchases into these funds to a fourth straight week.

They bought tech and financial sector funds of a notable of $1.18 billion and $920 million, respectively.

U.S. large-cap and small-cap fund segments, however, saw $2.42 billion and $114 million weekly outflows, while mid-cap funds saw a net $495 million weekly inflow.

Money market funds witnessed a net $20.98 billion outflow during the week that concluded a three-week trend of net inflows.

U.S. bond funds received a second successive weekly inflow to the tune of $6.49 billion.

Short-to-intermediate investment-grade funds, short-to-intermediate government and treasury funds and municipal debt funds stood out as these funds received inflows of $2.13 billion, $890 million and $678 million, respectively.