Global Equity Fund Inflows Surge, Driven by AI and Fed Rate Sentiment
Weekly Fund Flow Trends and Sector Highlights
Equity Fund Inflows Reach New Highs
July 10 (Reuters) - Global equity funds attracted their largest weekly inflow in three weeks in the week to July 8, as strong demand for AI-linked technology products and cooling expectations for Federal Reserve rate hikes boosted risk appetite.
Global equity funds drew a net $49.23 billion in inflows during the week, marking their largest weekly inflow since June 17, LSEG Lipper data showed.
AI and Technology Sector Drive Growth
Manufacturing Activity and AI Demand
Upbeat June manufacturing activity reports last week pointed to strong demand for AI-related products, including chips and computers.
AI-Sector Earnings Expectations
Expectations for robust AI-sector earnings also supported sentiment. The technology sector is forecast to post 54.2% year-on-year growth in second-quarter net income, according to LSEG data based on the mean of analysts' estimates.
Regional and Sectoral Fund Flows
Regional Inflows
By region, U.S. equity funds drew $24.97 billion in inflows, the largest in three weeks. Investors also bought $13.67 billion and $6.95 billion worth of European and Asian funds, respectively.
Sector-Specific Inflows
Technology Sector
The technology sector garnered significant interest, with funds attracting $11.49 billion in inflows, up by more than a quarter from $8.88 billion the previous week.
Financials and Industrials
Financials and industrials also drew notable inflows, at $1.52 billion and $789 million, respectively.
Bond and Money Market Fund Activity
Bond Fund Inflows
Inflows into global bond funds, at $31.34 billion, were meanwhile the largest since at least 2019.
Short-Term and Euro-Denominated Bonds
Short-term bond funds, euro-denominated bond funds, corporate bond funds and government bond funds recorded notable weekly net purchases of $7.19 billion, $3.87 billion, $2.92 billion and $2.73 billion, respectively.
Money Market Funds
Investors also allocated $83.76 billion to money market funds, their largest weekly net purchase since June 3.
Commodities and Emerging Markets
Precious Metals Outflows
Gold and other precious metals commodity funds, meanwhile, posted an eighth consecutive weekly outflow, totaling $372 million.
Emerging Market Trends
Emerging-market data covering 28,884 funds showed that equity funds lost about $500 million in an 11th consecutive weekly outflow. Bond funds still saw a net $1.66 billion in inflows.
(Reporting by Gaurav DograEditing by Ros Russell)
