In the week ending April 10, global investors pulled out of stock funds for the second week in a row, as concerns about inflation persisted and hopes of a June rate decrease by the US Federal Reserve began to wane.

The Federal Reserve’s decision to begin reducing interest rates in June becomes even more uncertain in light of economic statistics released on Wednesday, which revealed that U.S. consumer prices rose more than anticipated in March.

Throughout the week, there was a $2.9 billion outflow from global equities funds; U.S. and Asian equity funds witnessed outflows of $2.7 billion and $1.9 billion, respectively.

Conversely, $891 million was received by European equity funds.

Investors pulled a net $708 million out of the technology sector among sectoral funds, reversing a 12-week purchasing trend.

In contrast, investor anticipation of potential rate cuts by the Federal Reserve drove a $60 billion influx into global stock funds in the first quarter of this year, making riskier global equities more appealing.

Global bond funds, on the other hand, saw significant inflows during the course of the week, totaling $12.8 billion, as expectations for a U.S. rate decrease in the near future were tempered.

UBS Global Wealth Management’s chief investment officer, Mark Haefele, updated his projections, predicting that the Fed may cut rates by 50 basis points beginning in September rather than June.

We think that now is a good moment to lock in rates because by Wednesday’s US equities close, US Treasury 10-year yields will be at 4.55%. We still favour high-quality bonds,” he stated.

Friday saw a sharp decline in Wall Street’s primary indexes, closing a week characterised by stronger-than-expected inflation and jobs statistics that caused investors to reassess when to anticipate interest rate cuts.

$2 billion poured into government short-term U.S. dollar bonds, while $1.3 billion went into medium-term U.S. dollar bonds. U.S. currency municipal funds raised $505 million, while loan participation funds raised $686.6 million.

Conversely, withdrawals from U.S. dollar corporate bond funds totaled $1 billion, while withdrawals from global high-yield dollar bond funds decreased by $473 million.

Following a massive $105 billion inflow the week before, global money market funds saw a $3 billion outflow.

$524 million worth of precious metal funds were liquidated by investors in the commodities market, a change from the $691 million in net purchases made the week before. Conversely, there was a net outflow of $76 million from energy funds.

Investor purchases of emerging market (EM) bond funds decreased to $597 million from $1.67 billion the week before, according to data from 29,583 EM funds. In addition, they sold the most EM equities funds in five weeks, totaling $1.7 billion, in the week that ended on April 10.

(Adapted from Reuters.com)

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