Global Equity Funds Continue to See Inflows for the 11th Week Amid Interest Rate Cut Expectations
Global equity funds saw capital inflows for the eleventh consecutive week in the week ending December 11. Investors are anticipating potential interest rate cuts from the Federal Reserve due to the cooling labor market and stable consumer prices in the U.S.
According to LSEG Lipper data, these funds recorded a net inflow of $10.18 billion, continuing from the previous week's $21.19 billion net purchases. The U.S. labor market presented a mixed picture last week, with significant job growth in November, while the unemployment rate ticked up slightly to 4.2%. This combination of factors is seen as a potential catalyst for the Federal Reserve to consider a third rate cut this month.
Investment trends indicate that U.S. equity funds attracted $6.36 billion in net inflows for the sixth consecutive week, while European funds had a positive trend with a net inflow of $3.24 billion. However, Asian funds underperformed with a net outflow of $278 million.
Sector-specific funds experienced a shift and recorded their first weekly net outflow in five weeks, with a total outflow of $1.94 billion. The Health Services, Technology, and Consumer Discretionary sectors were particularly affected, experiencing respective outflows of $1.08 billion, $654 million, and $616 million.
Bond funds continued to attract investors for the 51st week in a row, with global bond funds bringing in $10.19 billion. Corporate bond funds stood out with a net inflow of $3.21 billion, marking the highest weekly inflow since September 18. Credit participation funds also saw inflows for the twelfth consecutive week, attracting a total of $1.32 billion.
On the other hand, money market funds experienced significant outflows last week, with investors pulling out $16.29 billion. This marked a notable reversal from the previous week's substantial net inflows of $169.16 billion.
In the commodities sector, energy funds had a net outflow of $256 million, continuing a trend of losses in three of the last four weeks. In contrast, gold and precious metals funds witnessed a net inflow of $190 million.
Emerging market funds faced challenges as well, with data covering 29,593 such funds indicating a net outflow of $2.35 billion from equity funds for the fifth consecutive week. These markets also saw bond funds experiencing net sales of $721 million.