Global equity funds see surge in inflows on Fed pause hopes

(Reuters) – Global equity funds saw significant inflows in the week ending Nov. 15, buoyed by investor hopes that cooler-than-expected U.S. inflation would prompt the Federal Reserve to pause interest rate hikes.

The MSCI World Equity Index hit a two-month peak of 686.32 this week, propelled by U.S. data on Tuesday indicating that consumer prices in October remained steady, defying expectations of a 0.1% increase. The core Consumer Price Index (CPI), rising only 0.2%, also fell short of the anticipated 0.3% hike.

Investors pumped in a net $11.48 billion into global equity funds during the week, marking the biggest weekly net purchase since June 14, LSEG data showed.

U.S. equity funds alone attracted $9.33 billion, a significant rise from the $1.84 billion in net purchases a week earlier. European and Asian equity funds also saw inflows, attracting $1.24 billion and $431 million, respectively.

The technology sector, in particular, witnessed a notable surge in interest, with a net $2.15 billion poured into the sector — the highest since Dec. 15, 2021.

Gold, precious metals and communication services sectors attracted $534 million and $237 million, respectively.

Global bond funds continued to attract capital, with approximately $3.5 billion channeled into them, marking the second consecutive week of net buying. High-yield bond funds recorded net purchases of around $5.01 billion, building on the previous week’s $6.43 billion inflow.

However, government bond funds saw a drastic reduction in inflows, receiving only $140 million, a 95% decrease from the $2.77 billion net buying in the week prior.

In the commodities market, energy funds remained popular for the fourth week in a row, securing about $77 million in inflows. Precious metal funds experienced modest inflows of $53 million, the smallest in three weeks.

Emerging market (EM) data, encompassing 29,658 funds, highlighted a net sell-off of $1.3 billion in EM bond funds during the week, a stark contrast to the $745 million net purchases seen a week earlier. EM equity funds continued to face headwinds, with a net $554 million exiting in a 14th consecutive week of outflows.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Kim Coghill)


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