What To Know
- Gold and precious metals commodity funds experienced a slowdown in demand, with inflows easing to an 11-week low of $2.
- Market watchers warn that unless there is a clear improvement in economic data or a reduction in trade hostilities, investor sentiment may continue to favor safer, income-generating assets over riskier equities.
International Business News: Investors Shift from Stocks to Safe Havens
Global equity funds experienced another week of significant outflows as market uncertainty intensified over escalating U.S. tariffs and signs of economic weakness. Data from LSEG Lipper showed that in the week ending August 6, investors pulled out a net $7.82 billion from global equity funds, adding to the $29.95 billion withdrawn the previous week. Safe-haven demand surged instead, with money market funds seeing their largest inflows since January, attracting $135.37 billion. According to this International Business News report, the move came as investors rushed to secure recent gains following U.S. President Donald Trump’s announcement of steep tariffs on exports from multiple trading partners, including Canada, Brazil, India, and Taiwan.
Global equity funds experienced another week of significant outflows.
Image Credit: StockShots
Economic Data Deepens Investor Concerns
The sell-off in equities was further fueled by a disappointing U.S. jobs report for July, which dampened confidence in the economic outlook. U.S. equity funds suffered $13.7 billion in net sales, overshadowing the inflows recorded in European and Asian equity funds, which gained $3.45 billion and $1.85 billion, respectively. However, some sector-specific funds bucked the overall negative trend—communication services, industrial, and tech sector funds saw inflows of $1.18 billion, $822 million, and $541 million, respectively, as certain industries retained investor interest despite the broader market volatility.
Bond Funds Emerge as a Strong Alternative
In a marked contrast to equities, global bond funds saw robust demand, recording $20.98 billion in inflows—their biggest weekly total since May 21. Short-term bond funds were particularly favored, pulling in $7.29 billion, the most since April 9. Euro-denominated bond funds and high-yield bond funds also attracted strong buying interest, with $3.5 billion and $2.48 billion in inflows, respectively, as investors sought stability and higher yields amid uncertainty.
Mixed Fortunes for Commodities and Emerging Markets
Gold and precious metals commodity funds experienced a slowdown in demand, with inflows easing to an 11-week low of $2.79 billion. Meanwhile, emerging markets painted a mixed picture—investors added $2.24 billion to emerging market bond funds for the third consecutive week but withdrew $2.76 billion from emerging market equity funds. Analysts suggest that while the appetite for fixed income remains strong, risk aversion is likely to keep equity flows under pressure in the near term, especially if trade tensions and weak economic indicators persist.
Market watchers warn that unless there is a clear improvement in economic data or a reduction in trade hostilities, investor sentiment may continue to favor safer, income-generating assets over riskier equities. The current trend reflects heightened caution across global markets, where many are bracing for further volatility in the months ahead.
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