Global equity funds see 11th week of inflows on rate cut hopes

Global equity funds have seen an influx of capital for the eleventh consecutive week, ending December 11, as investors anticipate potential interest rate cuts by the Federal Reserve, influenced by a cooling labor market and stable consumer prices in the United States.

According to data from LSEG Lipper, these funds received a net of $10.18 billion, a follow-up to the previous week's $21.19 billion in net purchases.

The U.S. labor market demonstrated a mixed picture last week, with a notable rise in job growth for November, despite a slight uptick in the unemployment rate to 4.2%. This combination of factors is seen as a possible catalyst for the Federal Reserve to consider a third rate reduction in the current month.

Investment trends showed that U.S. equity funds attracted $6.36 billion in net inflows for the sixth week running, while European funds also saw a positive trend with $3.24 billion in net inflows. However, Asian funds did not fare as well, with a net outflow of $278 million.

Sector-specific funds experienced a shift, recording their first weekly net outflow in five weeks, totaling $1.94 billion. Healthcare, technology, and consumer discretionary sectors were particularly affected, with outflows of $1.08 billion, $654 million, and $616 million, respectively.

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 $3.21 billion in net inflows, marking the highest weekly intake since September 18, while loan participation funds enjoyed their 12th straight week of inflows, totaling $1.32 billion.

Money market funds, on the other hand, saw significant withdrawals last week, with investors pulling out $16.29 billion. This was a notable reversal from the substantial $169.16 billion net purchases seen the week prior.

In the commodities sector, energy funds faced a net outflow of $256 million, continuing a trend of losses for three out of the past four weeks. Contrastingly, gold and precious metal funds experienced net inflows of $190 million.

Emerging market funds also faced challenges, with data covering 29,593 such funds indicating a withdrawal of $2.35 billion from equity funds for the fifth week in a row. Bond funds from these markets also saw net sales amounting to $721 million.

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