During the week ending April 3, investors showed caution in global equity markets amid speculation about the Federal Reserve’s stance on interest rate cuts. Strong economic reports from the U.S. and robust labor demand prompted investors to reassess their expectations, leading to a net outflow of $2.08 billion from global equity funds, the first weekly decline since February 21.
The latest ISM report revealing growth in U.S. manufacturing in March, coupled with an increase in job openings in February, diminished expectations of imminent rate cuts by the Federal Reserve. Consequently, investors reduced their exposure to U.S. and European equity funds by $3.28 billion and $1.63 billion, respectively. However, Asian funds remained resilient, attracting approximately $2.02 billion in net purchases.
The healthcare sector endured its fourth consecutive week of net selling, witnessing outflows of around $1 billion. Similarly, consumer staples and utilities sectors experienced net outflows of $239 million and $225 million, respectively.
In contrast, global investors favored bond funds, with net purchases totaling $14.71 billion, marking the largest weekly acquisition in four weeks. Medium-term U.S. dollar bonds saw a notable surge in demand, securing approximately $4.55 billion, the highest weekly inflow since May 3, 2023. Corporate and government debt funds also recorded significant net purchases of $2.36 billion and $776 million, respectively.
Moreover, money market funds attracted substantial capital during the week, amounting to $104.32 billion in net inflows, the highest level since January 3.
In the commodities market, investors shifted their focus towards precious metals, with net purchases amounting to $663 million, reversing the trend from the previous week. Conversely, energy funds experienced net outflows of $52 million.
Data covering emerging markets revealed that bond funds accumulated approximately $1.42 billion in net purchases, the highest since early December 2023. However, equity funds faced an outflow of $851 million during the same period.
Overall, the cautious sentiment among investors reflected uncertainty surrounding the Federal Reserve’s monetary policy direction, prompting adjustments in asset allocations across global markets.
Comment Template