US equity funds draw first weekly inflow in 3 weeks ahead of Fed easing

U.S. investors ‌bought ​equity funds for ‌the first time in three weeks ​in the week through December 10 in anticipation ‍of a policy rate ​cut by the Federal Reserve on ​Wednesday.

They ⁠purchased a net $3.3 billion worth of U.S. equity funds during the week, closely reversing a net $3.52 billion outflow the prior week, LSEG Lipper data ‌showed.

Investors, however, remained concerned over a slower pace ​of ‌profitability for artificial intelligence ‍companies ⁠as earnings guidance from Oracle missed market expectations on Wednesday.

U.S. equity sectoral funds received a net $2.81 billion, the largest weekly inflow since a $4.03 billion net purchase in the week to October ​22.

Metals and mining, industrials and healthcare funds saw weekly inflows to the tune of $672 million, $548 million and $527 million, respectively.

U.S. bond funds witnessed $3.49 billion weekly net purchase, significantly higher than the previous week’s $291 million net inflows.

Investors pumped $2.61 billion into short-to-intermediate investment-grade funds, the largest amount in seven weeks. They, however, ​shed general domestic taxable fixed income funds of $902 million.

Money market funds, meanwhile, had a net $4.58 billion weekly outflow following a robust $105.03 ​billion weekly net purchase the prior week.

The U.S. dollar rose against major currencies on Friday after falling in ‌recent ​sessions, but was still on track for its third straight ‌weekly drop amid the prospect of interest rate cuts by the Federal Reserve next year.

Sterling also eased after data showed the UK economy unexpectedly ​shrank in the three months to October.

The euro was flat at $1.1735 after hitting a more than two-month high on Thursday.

The dollar index, which measures the U.S. currency against six others, rose 0.1% to 98.44, rallying from a ‍two-month low hit on Thursday but still on track for ​its third weekly decline with a 0.6% fall. For the month of December, the greenback has been 1.1% weaker so far.

The index was also down more than 9% this year, on pace for its steepest annual ​drop since 2017.

“It’s Friday ⁠fatigue. The dollar is down on the week and it’s pretty much down the whole month,” said Bob Savage, head of markets macro strategy at BNY in New York. “And is it because the Fed cut rates? Yes partially.”

Against the yen, the dollar rose 0.2% to 155.93 yen ahead of next week’s Bank of Japan meeting, where the broad expectation is for a rate hike. Markets are focused on comments from policymakers on how the rate path will look in 2026.

Reuters reported that the BoJ would likely maintain a pledge next week to keep raising interest rates, but stress ‌that the pace of further hikes would depend on how the economy reacts to each increase.

The pound edged down 0.2% against the dollar to $1.3375, but not far from a seven-week peak ​hit ‌on Thursday, after economic data that was ‍likely to boost expectations for Bank of England ⁠interest rate cuts.

Both sterling and the euro are poised for their third straight week of gains against the dollar.

The Fed cut rates as expected this week but comments from Chair Jerome Powell and the accompanying statement were viewed by investors as less hawkish than expected and reinforced dollar-selling momentum.

“That was a neutral cut,” said BNY’s Savage, disagreeing with market participants describing the Fed’s move last Wednesday as a some form of “hawkish” easing.