Global equity funds see major outflows as rate cut views shift
Global equity funds experienced heavy outflows in the week to Feb. 7, aligning with Federal Reserve Chair Jerome Powell’s remarks on U.S. inflation and a strong jobs report, as markets reassess bets of the Fed’s interest rate decisions.
According to data from LSEG, investors withdrew a net $13.38 billion from global equity funds, the most in a week since June 21, 2023.
This response was shaped by a U.S. Labor Department report indicating accelerated job growth and the most substantial wage increase in nearly two years in January, affecting projections for rate cuts.
The U.S. equity funds suffered about $11.74 billion worth of net selling, the biggest weekly outflow since Dec. 2022. On the contrary, investors poured about $3.44 billion and $1.33 billion into Asian and European funds, respectively.
Energy, utilities, and metals & mining funds saw about $608 million, $526 million and $448 million worth of net disposals. Conversely, healthcare funds received about $760 million in inflows.
Meanwhile, global bond funds secured inflows for the seventh successive week, valuing about $6.33 billion on a net basis.
Dollar-denominated global bond funds received a noteworthy $2.19 billion, the highest since at least March 2022. Global government and corporate bond funds received inflows worth $593 million and $553 million, respectively.
Concurrently, money market funds garnered about $26.95 billion in inflows as they saw a second successive week of net buying.
In commodities, energy funds saw $255 million worth of net buying, the largest since Oct. 25. However, precious metal funds witnessed $423 million worth of outflows, a second successive week of net selling.
Data covering 29,635 emerging market funds showed bond funds drew $314 million in their first weekly net purchase since Jan. 17, while equity funds witnessed a marginal $25 million worth of net selling.