Global Equity Funds Continue Gains for the Ninth Week

SadaNews Economy - Global equity funds attracted financial inflows for the ninth consecutive week until July 22, as investors' optimism for a strong earnings season continues, despite escalating tensions in the Middle East and recent weakness in semiconductor stocks.

Investors purchased a net of $10.51 billion in global equity funds during the week, a level slightly lower than the purchases of the previous week, which amounted to $12.48 billion, according to data from Lipper.

Optimism regarding the ongoing earnings season boosted demand for European equity funds, as estimates from LSEG data indicate that the earnings of major European companies listed on the leading stock index are expected to grow at their fastest pace in over three years. The employment company Randstad, along with energy companies Total Energies and Repsol, reported strong results.

Investors pumped a net of $10.29 billion into European equity funds, following net purchases of about $8.87 billion in the previous week. Asian funds attracted inflows of $4.5 billion, while U.S. funds recorded net outflows of $7.34 billion.

In sector-specific funds, technology sector funds attracted net inflows of $2.12 billion, marking the fourth consecutive week of incoming flows. Funds from the financial and healthcare sectors attracted inflows of $1.7 billion and $1.36 billion, respectively.

In contrast, net investments in global bond funds dropped to their lowest level in 16 weeks at $3.34 billion, with the renewed rise in crude oil prices raising concerns about inflation.

Global short-term bond funds recorded outflows of $5.75 billion, following 13 consecutive weeks of inflows. However, investors bought a net of $1.74 billion in government bond funds, $856 million in participation loan funds, and $806 million in euro-denominated bond funds.

Money market funds remained unpreferred by investors for the second consecutive week, recording net outflows of $40.97 billion.

In commodity markets, investors pumped a net of $166 million into energy funds and $1.46 billion into gold and other precious metals, marking the second consecutive week of net purchases.

Data covering 28,874 funds in emerging markets showed that equity funds attracted inflows of $3.96 billion for the second consecutive week, while bond funds recorded limited weekly outflows of $43.58 million.

U.S. Equity Funds Anticipate Technology Company Earnings

Investors sold a net of $7.34 billion from U.S. equity funds during the week ending July 22, a much higher level than the net sales recorded in the previous week, which amounted to $4.18 billion.

Earnings reports from Alphabet and Tesla earlier this week disappointed investors, as they highlighted concerns over rising investment costs in artificial intelligence, sustainability of growth, and cash burn rates. Microsoft, Amazon, and Meta Platforms are set to announce their results next week.

U.S. growth equity funds recorded outflows of $8.55 billion, the largest in three weeks. Value equity funds also saw outflows of $1.39 billion, ending a three-week streak of inflows.

In contrast, investors continued to buy sector-specific funds for the fourth consecutive week, recording net inflows of $2.46 billion. Investors poured $1.39 billion into financial sector funds, $1.35 billion into healthcare funds, and $1.17 billion into technology funds.

Meanwhile, U.S. bond funds recorded outflows of $2.36 billion, ending a streak of net inflows that lasted for 13 weeks.

Short- to medium-term investment-grade bond funds recorded their first weekly outflows since April 15, amounting to a total of $7.29 billion. In contrast, government bond funds and U.S. Treasury bonds with short- to medium-term maturities, along with taxable local fixed income funds, attracted inflows of $1.32 billion and $961 million, respectively.

Money market funds recorded a net weekly outflow of $25.17 billion, following outflows of about $67.16 billion in the previous week.