Investors Shift Gears: Global Equity Outflows and Mixed Market Signals

Global equity funds saw first weekly outflow in weeks due to profit-taking amid geopolitical tensions. Investors redirected funds towards safer options like money market and bond funds. Despite outflows, certain sectors such as tech sustained interest, underscoring mixed market signals and ongoing investment adjustments.

Global equity funds experienced their initial weekly outflow in five weeks by September 10, as investors opted to lock in profits, reducing their risk exposure. Major equity markets reached unprecedented highs, buoyed by the expectation of three rate cuts from the U.S. Federal Reserve this year. However, political uncertainty in France and Japan, alongside rising geopolitical tensions in the Middle East and Ukraine, prompted a more cautious market outlook.

According to LSEG Lipper data, there was a net withdrawal of $3.06 billion from global equity funds in the first week of net sales since August 6. This outflow was largely driven by a net $10.44 billion in sales of U.S. equity funds, marking the highest in five weeks. Meanwhile, European and Asian funds saw net inflows of $3.77 billion and $1.87 billion, respectively.

Sectoral funds continued their upward trajectory with a $5.04 billion weekly inflow, marking the third consecutive week of net gains. Technology, healthcare, and consumer discretionary funds attracted $3.59 billion, $709 million, and $544 million, respectively. Global bond funds experienced a substantial $18.18 billion weekly net investment, as investors continued their 21-week streak of demand for such funds.

(With inputs from agencies.)