Global equity funds draw $12.5B as investors rotate from US to Europe

Global equity funds attracted $12.46 billion in net inflows for an eighth consecutive week through July 15, though the pace slowed sharply from the prior week's $48.35 billion as investors rotated from US stocks into European and Asian markets.

"The moderation reflects profit-taking after a surge in buying the previous week rather than a broader deterioration in sentiment," said Priya Mehta, equity market structure analyst at Edgen. "The continued inflows suggest investors remain constructive on equities despite elevated valuations."

European equity funds emerged as the biggest beneficiaries, drawing $9.49 billion, while Asian funds attracted $5.4 billion, according to LSEG Lipper data covering 28,904 funds. US equity funds experienced $4.8 billion in net outflows, indicating a geographic rotation after a prolonged period of American market outperformance. Technology remained the most popular sector at $3.37 billion of inflows, though that represented the smallest weekly total in three weeks. Financial sector funds received $567 million and healthcare funds drew $558 million.

The rotation was fueled by softer-than-expected US inflation data. June consumer prices fell 0.4 percent month over month, the first monthly decline since the Covid-19 pandemic, while core inflation was unchanged. The report strengthened expectations that the Federal Reserve may not need to resume interest rate increases, pushing the 10-year Treasury yield lower and the dollar weaker. Bond funds extended their buying streak to 15 consecutive weeks with $16.16 billion of inflows, while investors pulled $102.53 billion from money market funds — the largest weekly cash outflow since April 15 — suggesting capital is moving back into risk assets.

Gold Rebounds as Emerging Markets Return

Gold and precious metals funds attracted $376 million, ending an eight-week streak of withdrawals, as a weaker dollar and geopolitical uncertainty supported demand. Spot gold traded near $4,017 an ounce after falling $103, or 2.5 percent, for its steepest weekly decline since early June. Bank of America lowered its 2026 average gold price forecast to about $4,360 an ounce, while HSBC projected a range of $3,800 to $4,700 for the remainder of the year.

Emerging-market equity funds drew $2.74 billion, ending an 11-week outflow streak, and emerging-market bond funds recorded $795 million of fresh inflows. The turnaround suggests investors are rebuilding exposure to developing economies as expectations grow that the Fed may adopt a less restrictive stance. Historically, easing US monetary conditions support emerging-market assets by reducing pressure on local currencies and lowering financing costs.

Energy funds recorded $145 million in net outflows despite elevated oil prices, indicating caution about the sector's longer-term outlook amid uncertainty over global economic growth. The strong start to second-quarter earnings season helped reinforce confidence, with major Wall Street banks including Bank of America, JPMorgan Chase and Morgan Stanley reporting stronger-than-expected results. Dutch semiconductor equipment maker ASML also exceeded quarterly earnings expectations and raised its 2026 outlook, boosting confidence that AI-related investment remains robust.

This article is for informational purposes only and does not constitute investment advice.