Global equity funds experienced a significant increase in investments during the week ending January 29. This surge was fueled by a record rally in European shares, easing U.S. tariff expectations regarding China, and the possibility of further rate cuts by major central banks.
Investors contributed a substantial $15.2 billion to global equity funds during this week. This marked the largest weekly net purchase since December 25, 2024, according to LSEG Lipper data.
Investor interest rose sharply due to a strong rally in European shares. These shares remained resilient despite a sell-off in major U.S. AI-linked stocks, which was triggered by concerns over DeepSeek, a low-cost Chinese artificial intelligence model.
The STOXX 600 index in Europe reached a record high of 540.49 on Friday. This achievement marked the index’s sixth consecutive week of gains, the longest streak since March 2024.
The European Central Bank lowered interest rates by 25 basis points on Thursday. This action fueled optimism that U.S. rates might also decrease further this year. President Donald Trump mentioned at the World Economic Forum his desire to lower global oil prices, interest rates, and taxes, which contributed to this optimism.
Meanwhile, the Federal Reserve maintained steady rates this week.
European equity funds led the regional inflows, gaining $5.66 billion in net purchases. U.S. and Asian funds also saw significant investments, with $5.58 billion and $3.03 billion added, respectively.
In addition, global bond funds recorded their fifth consecutive week of inflows, totaling $21.14 billion.
Government bond funds attracted $3.25 billion, the highest weekly inflow since October 16, 2024. High-yield funds, loan participation funds, and inflation-linked funds also received considerable inflows of $2.06 billion, $1.78 billion, and $1.52 billion, respectively.
The European Central Bank cut rates this week, as did the Bank of Canada. The Bank of England is expected to follow suit, but markets anticipate that the Fed will hold steady until at least June.
In contrast, money market funds experienced outflows totaling $40.57 billion, marking the second week of net selling in six weeks.
In the commodities sector, investors divested a net $615.92 million from precious metals funds, indicating their fourth weekly net selling in five weeks. Conversely, energy funds recorded a net purchase of $172.87 million.
Data covering 29,492 emerging market funds showed that equity funds experienced outflows for the twelfth consecutive week, totaling a net $1.95 billion. However, bond funds enjoyed their fourth consecutive week of inflows, amounting to a net $2.08 billion.
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