Global equity funds post second weekly outflow on wariness over economic outlook By Reuters

(Reuters) – Global investors were net sellers of equity funds for the second week in a row through Sept. 11, amid concerns about the health of the U.S. economy and caution over the political climate in the run-up to the U.S. presidential debate.

However, optimism about central bank rate cuts reduced flows.

According to LSEG data, investors withdrew $3.46 billion from global equity funds during the week, a reduction in selling volume compared to net sales of $4.96 billion the previous week.

US data signaling an economic slowdown sparked last week’s global equity sell-off, but global shares have rebounded more than 2% this week after an ECB interest rate cut and the prospect of a 50 basis point rate cut USA in next week’s meeting.

Investors sold $7.82 billion worth of U.S. equity funds last week, after net sales of $11.54 billion the previous week. In contrast, Asian and European funds attracted inflows of $2.91 billion and $793 million, respectively.

“We again favor global equities over fixed income as rate cuts begin across the globe and unemployment remains low,” Ajay Rajadhyaksha, head of global research at Barclays, said in a note.

“But investors may choose to sit on the sidelines for now, awaiting clarity following the US presidential election.”

The technology sector saw a substantial outflow of $1.97 billion in the week to September 11, the most since November 2023. Meanwhile, investors pulled $1.53 billion from the financial sector and allocated $1.12 billion to and $878 million for consumer goods and utilities, respectively.

During the week, investors added $21.67 billion and $4.14 billion to safer money market and government bond funds, respectively.

Global bond funds attracted $11.81 billion in a 38th consecutive week of inflows, with investors mainly investing $3.12 billion in short-term funds and $1.5 billion in high-yield funds.

Gold and other precious metals funds maintained their appeal for a fifth straight week with net purchases of $472 million, while energy funds posted a $150 million increase in inflows.

Data covering 29,592 emerging market funds showed equity funds lost $1.05 billion in outflows for the 14th straight week. In contrast, bond funds gained $567 million, marking the 12th consecutive week of inflows.