Global investors stepped up purchases in equity funds in the week ended Nov. 27, encouraged by prospects of robust U.S. growth under the Trump administration and boosted by cooling treasury yields.
Investors pumped a substantial $12.19 billion into global equity funds, a jump of 32% compared with about $9.24 billion worth of net acquisitions in the week before, LSEG Lipper data showed. It marked the ninth consecutive weekly inflow.
On Friday, global shares were on track for their best month since May, driven by optimism about strong U.S. growth and the artificial intelligence investment boom, despite concerns over political turmoil and economic slowdown in Europe.
Last week, U.S. President-elect Donald Trump’s appointment of fiscal hawk Scott Bessent as U.S. Treasury Secretary raised market expectations of controlled debt levels in his second term, leading to a drop in Treasury yields.
Investors picked a significant $12.78 billion worth of U.S. equity funds, extending net purchases into a fourth successive week. However, they withdrew $1.17 billion and $267 million out of Asian and European funds, respectively.
The financial sector witnessed robust demand as it drew $2.65 billion in net purchases, the fifth weekly inflow in a row. Investors also snapped up consumer discretionary, tech and industrials sector funds totaling a hefty $1.01 billion, $807 million and $778 million, respectively.
Global bond funds witnessed inflows for the 49th successive week. Investors poured $8.82 billion into these funds.
Corporate bond funds received a net $2.16 billion, the biggest weekly inflow in four weeks. Government bond funds and loan participation funds also witnessed notable purchases, totaling a net $1.9 billion and $1.34 billion, respectively.
At the same time, investors ditched $12.87 billion worth of money market funds in a second straight week of net sales.
The gold and precious metals funds gained a net $538 million, marking a 14th weekly inflow in 16 weeks.
Data covering 29,635 emerging market funds indicated that equity funds were out of favour for a fifth consecutive week with about $4.3 billion in net sales. Investors also divested bond funds to the tune of 2.58 billion, logging a sixth weekly net sales.
Europe’s STOXX 600 ended the week on a high note, bolstered by a rally in tech stocks, while investors analysed the euro zone inflation report to assess the likelihood of a larger interest rate cut in December.
The pan-European main stock index reversed earlier losses and was up 0.6% at 510.25 points on Friday, logging its first monthly gain since August. It rose 1% in November. On a weekly basis, it logged a modest 0.2% decline.
Technology stocks were the biggest boost to the index, gaining 1.6%.
Trading volumes were expected to be low, with the U.S. equity market open for half a day following the Thanksgiving holiday on Thursday.
Euro zone flash inflation rose to 2.3% on a yearly basis in November, in line with forecasts.
Markets are now pricing in a more than 80% chance of a 25 basis-point cut at the European Central Bank’s meeting on December 12.
Capital Economics’ analysts think the case for a 50 basis point cut still remains strong. “Data released this week suggest that the euro-zone economy is struggling,” they said in a note.
While the STOXX 600 has achieved a modest monthly gain over three months, it significantly lagged behind the U.S. S&P 500. Investor sentiment towards the European bloc was dampened by several factors, including the potential for U.S. tariffs, political uncertainty in France, and geopolitical tensions.
Auto stocks were among the worst hit in November, knocked down by concerns that U.S. President-elect Donald Trump’s proposed tariffs on Mexico could be more damaging for European car makers than any direct tariffs on EU goods.
Defence stocks on the other hand, gained the most among sectors, largely due to the Russia-Ukraine conflict.
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