Global investors extend buying streak into equity funds on signs of easing inflation

8:51 am Friday, July 07th, 2023

(Reuters) – Global investors extended their streak as net buyers of equity funds into a second week, drawing support from indications of cooling inflation that may moderate central banks’ inclination to raise rates further.

According to Refinitiv Lipper data, global equity funds received a net $5.94 billion in inflows in the week ended July 5, after witnessing net buying of $3.36 billion in the previous week.

Last week’s personal consumption expenditures (PCE) report from the U.S Commerce Department showed cooler-than-expected inflation in May, while consumer spending abruptly decelerated, providing further evidence that the Fed’s barrage of rate hikes are having their desired effect.

Investors allocated $4.44 billion to U.S. equity funds and $2.29 billion to Asian equity funds, while withdrawing $1.29 billion from European funds.

Among sector funds, inflows of $871 million were observed in industrials, $278 million in consumer staples, and $275 million in technology. However, financials experienced an outflow of $548 million.

Meanwhile, global bond funds received a net $10.4 billion in a second straight week of net buying.

Global government bond funds attracted inflows of $1.82 billion, while corporate bond funds recorded the largest weekly inflow in six weeks with $2.19 billion. Additionally, high-yield funds saw net purchases of $536 million, rebounding after two consecutive weeks of outflows.

Investors also pumped $53.1 billion into money market funds, marking their first weekly net buying in four weeks.

Data for commodity funds showed that investors withdrew $767 million from precious metal funds in a sixth straight week of net selling, but energy funds received about $35 million after two weekly outflows in a row.

Meanwhile, data for 24,130 emerging market funds showed equity funds had $504 million worth of outflow during the week, the first in four weeks, but bond funds received about $1.4 billion in inflows.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Maju Samuel)