US equity funds see outflows for third straight week

U.S. equity funds witnessed outflows for a third straight week through April 30, driven by worries over the impact of U.S. trade policies on economic growth and business sentiment.

According to LSEG Lipper data, investors withdrew a net $15.56 billion from U.S. equity funds during the week, registering their largest weekly net sales since December 18, 2024.

U.S. large-cap funds witnessed a robust $14.06 billion worth of net disposals, the biggest weekly outflow in six weeks.

Investors also pulled out $3.94 billion, $1.48 billion and $1.26 billion respectively from U.S. small-cap, multi-cap and mid-cap funds.

Sectoral funds, meanwhile, attracted inflows for the first time in nine weeks. The financials and consumer staples sectors saw a notable $502 million and $433 million worth of net purchases, respectively.

U.S. bond funds saw a second successive week of inflows, although a marginal $230 million flew into these funds.

By segment, U.S. municipal debt funds and U.S. mortgage funds attracted a significant $1.57 billion and $961 million, respectively, in inflows.

Investors, however, withdrew approximately $2.87 billion from U.S. money market funds during the week, following a net $24.43 billion worth of purchases in the previous week.

Today’s Market Minute

* Beijing is “evaluating” an offer from Washington to hold talks over U.S. President Donald Trump’s 145% tariffs, although it warned the United States not to engage in “extortion and coercion.”

* Japan could use its $1 trillion-plus holdings of U.S. Treasuries as a card in trade talks with Washington, raising explicitly for the first time its leverage as a massive creditor to the United States.

* Apple CEO Tim Cook told analysts on Thursday that tariffs could add about $900 million in costs this quarter as the iPhone maker shifts its vast supply chain to minimize the impact of the trade war.

* The Trump administration ended U.S. duty-free access for low-value shipments from China and Hong Kong on Friday, removing the “de minimis” exemptions availed of by Shein, Temu and other e-commerce firms as well as traffickers of fentanyl and other illicit goods.

* A Reuters review of almost 100 Chinese and Hong Kong companies added to the U.S. entity list in 2023 and 2024 found more than a quarter contained erroneous details, such as incorrect names and addresses and outdated information.

Buy in May?

The U.S. stock rebound has gathered steam as the new month gets underway, confounding the old ‘sell in May’ adage, largely due to trade war de-escalation hopes and some selective tech optimism.

April’s employment report on Friday will tell us a lot about the durability of this rally, as last month’s jobs market picture remained mixed. A big jump in jobless claims last week was put down to seasonal quirks related to a late Easter.

Meanwhile, the broader economic picture continues to be less a cause for cheer than a case of “it could have been worse”. ISM’s manufacturing survey on Thursday showed an ongoing contraction in factory activity in April, but by slightly less than feared.

Signs of some rowback in the extreme U.S.-China trade standoff could be more of a boost, coming as they do alongside the week’s impressive Microsoft and Meta earnings beats.

That said, the fortunes of Big Tech megacaps may be diverging. Apple disappointed the Street overnight after it noted the high costs associated with shifting its supply chains, and its stock was down about 4% ahead of Friday’s bell. And Amazon shares were also down 2% as its cloud business and income guidance fell short of expectations.

Pharma stocks were also hit on Thursday. Even though Eli Lilly results topped expectations, its shares tumbled 12% after CVS Health said it was dropping Lilly’s obesity drug Zepbound from some lists of medicines covered for reimbursement.

And yet the more positive mood music around the trade war seems to have encouraged the broader market nonetheless.

Beijing is “evaluating” an offer from Washington to hold talks over President Donald Trump’s steep tariffs, China’s Commerce Ministry said on Friday, signalling a potential breakthrough in the severe faceoff.

The pressure to talk has been building as the Trump administration ended U.S. duty-free access for low-value shipments from China and Hong Kong, removing “de minimis” exemptions.

Taking it all in, however, S&P 500 futures were up another 0.5% ahead of Friday’s open, adding to yesterday’s cash market gains. Futures on the small cap Russell 2000 were up 1%.

All of which means the main Wall Street indexes have recovered most or all of the losses seen since the April 2 tariff sweep, even though they remain deeply negative for the year.

Given the unusually negative start for the year, many strategists wonder if seasonal trends captured in the “sell in May and go away” quip will hold this year. And most reckon the huge macro uncertainties mean it’s equally impossible to apply it in reverse.

Flipping back to Friday’s diary, the payrolls report will dominate early on, with consensus set for a drop in job growth last month to 130,000. ‘Big Oil’ dominates the earnings slate.