(Reuters) – Global equity funds saw a jump in outflows in the seven days through April 17 as speculation the U.S. Federal Reserve will delay cutting interest rates dampened investor sentiment.
Outflows were also fuelled by escalating geopolitical tensions in the Middle East following Iran’s attack on Israel on Saturday.
Investors pulled a net $23.48 billion from global equity funds during the week, their largest weekly net withdrawal since mid-December 2022, data from LSEG showed.
Federal Reserve Chair Jerome Powell, addressing recent economic data on Tuesday, indicated that stronger than expected U.S. inflation figures over the past three months did not provide a strong basis for changing monetary policy soon.
Concurrently, the yield on the benchmark 10-year U.S. bond climbed to a five-month high of 4.696% during the week, diminishing the attractiveness of mega-cap growth stocks and their associated mutual funds.
Regionally, U.S. equity funds saw $21.15 billion of outflows during the week, the biggest weekly net selling since December 2022.
European equity funds saw a net $5.39 billion of withdrawals, while Asian funds attracted a net $1.94 billion of purchases.
Consumer discretionary and healthcare sectors both saw weekly net sales of nearly $800 million each. Investors also sold out of tech as well as gold and precious metals funds to the tune of $585 million and $582 million, respectively. They bought a net $943 million of financials sector funds.
Bond funds, meanwhile, attracted $965 million, the smallest weekly net inflow since December 2023.
Investors pulled a net $3.93 billion from riskier high-yield bond funds, the most in a week since February 2023. In contrast, government bond funds attracted $1.7 billion in a 12th successive week of net inflows.
Money market funds saw $139.44 billion of net selling, the largest weekly outflow since at least July 2020.
Among commodities, precious metal funds remained out of favour for the second week in a row as they lost $549 million on a net basis. Energy funds, however, saw $201 million worth of net purchases.
Data covering 29,598 emerging market funds showed a net outflow of $2.94 billion from bond funds during the week, the most in 12 weeks. Equity funds saw about $962 million of net outflows.
(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Mark Potter)
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