Global equity inflows surge as cooling U.S. inflation lift markets

Global funds posted strong records in three weeks following an easing of U.S.-China trade tensions. The easing inflation data in the U.S. has also pushed the global fund markets to strong results. 

Lipper data from LSEG showed that global equity funds recorded a net inflow of $11.03 billion this week, marking the strongest week since the start of October. The record inflows followed renewed hopes that U.S. President Donald Trump would meet with China’s Xi Jinping next week, which could secure new trade deals. 

Global equity funds post $11.03 billion in inflows this week

The U.S. CPI rose 3.0% YoY in September, slightly below the projected 3.1%, supporting the hope that the Federal Reserve may reduce interest rates in the upcoming meeting starting Tuesday next week. The easing inflation data in the U.S. encouraged flows into the global equity funds market and risky assets.

Cryptopolitan covered the CPI release yesterday, noting that the Core CPI, excluding food and energy prices, rose 0.2% month-over-month and 3.0% year-over-year, below the previous forecast of 0.3% and 3.1%, respectively.

U.S. equity funds led in global inflows, adding approximately $9.65 billion after two consecutive weeks of outflows. Asian equity funds also recorded $2.81 billion in inflows following regained confidence in the region’s growth outlook. European funds, however, posted negative flows, recording $2.25 billion in outflows this week. Despite the negative flows in EU funds, local equity indexes, such as the FTSE, recorded new highs yesterday, buoyed by the easing U.S. inflation data released the previous day. 

Technology sector equities led the way in inflows, with $2.92 billion, marking the highest weekly inflow since early October. According to LSEG, investors poured $886 million into gold and precious metals equity funds and $891 million into the industrial sector. Gold and precious metals commodity funds posted their ninth straight week of inflows in the global market, totaling $7.16 billion, even as equities climbed.

European equities, such as the STOXX 600 index, rose by 0.2% to an all-time high of 575.76. The FTSE 100 also recorded 0.7% growth today. The STOXX 600 gained over the week, following increased activity in consumer and energy stocks. 

Industrial and financial stocks led the Friday rally, with Lifco surging over 10% after surpassing third-quarter estimates. Saab stock rose by 6.1% following an upward revision of its annual sales forecast. LSEG group rose by 5% after brokerages raised price targets, and NatWest gained 4.9% following a higher Q3 profits result.

Christoph Schon, head of investment decision research at SimCorp, stated that the rate expectations in the U.S. significantly impact global financial markets, and European share prices are reacting accordingly.

Global funds brace for Fed decision with record bond buying

The global bond market also attracted capital inflows, with $17.33 billion posted this week, according to LSEG data. This marks the 27th week of record inflows. Government bonds added $3.13 billion, while corporate bond funds added $1.78 billion. The euro-denominated bond funds recorded $3.2 billion in new investments. 

Money Market funds received $13.12 billion in new investments, reversing last week’s $7.02 billion outflows. This suggests that while the broad sentiment favors risky assets, investors remain uncertain about upcoming market trends.

For a third consecutive week, bond funds attracted $1.2 billion in emerging markets. In comparison, equity funds saw $440 million in outflows. This means there is a consistent caution among investors facing volatility in developing economies and currency fluctuations.

Investors await next week’s Federal Reserve policy meeting, where a 25-basis-point rate cut is widely anticipated. As of Friday, the CME FedWatch Tool showed a 96.7% probability of a rate cut.

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