Investors piled into equity funds ahead of Fed rate cut, US-China trade deal

Global equity funds attracted massive investments in the week to October 29 ahead of an anticipated interest rate cut by the US Federal Reserve and a trade deal between US President Donald Trump and Chinese President Xi Jinping.

Investors accumulated a net USD 10.58 billion worth of global equity funds, extending their recent run of inflows into a sixth straight week, data from LSEG Lipper showed.

The Fed reduced interest rates by 25 basis points on Wednesday, thanks to easing inflationary pressure. The Fed Chair Jerome Powell, however, pushed back against another rate cut in December due to a lack of federal government data.

Trump on Thursday said he had agreed to reduce tariffs on Chinese imports in exchange for Beijing cracking down on the illicit fentanyl trade, resuming US soybean purchases and keeping rare earth exports flowing.

Asian equity funds witnessed the sharpest weekly inflow since January 2024 to the tune of USD 7.19 billion, with roughly USD 5.46 billion flowing into Japan.

US and European funds also secured USD 1.81 billion and USD 137 million inflows, respectively.

Sectoral funds had a mixed set of investments as tech and utilities saw inflows of USD 2.54 billion and USD 504 million, while investors ditched gold and precious metals equity funds of USD 1.51 billion.

Global bond funds recorded weekly inflows for the 28th straight week as these funds gained a net USD 11.84 billion in weekly inflows.

Investors pumped nearly USD 3.14 billion into euro-denominated bond funds, in line with the prior week’s USD 3.33 billion net purchase.

Government bond funds and high-yield bond funds also saw a significant USD 2.84 billion and USD 1.66 billion weekly net purchase.

Weekly net investments in money market funds, meanwhile, eased to USD 3.26 billion from USD 13.56 billion in the prior week.

Gold and precious metals commodity funds saw a net USD 4.17 billion weekly outflow, the first net sale in 10 weeks.

In emerging markets, investors snapped up equity funds to the tune of USD 2.23 billion, the most for a week since September 24, but they shed bond funds worth USD 437 million, data for a combined 28,822 funds showed.

(Reporting by Gaurav Dogra; Editing by Hugh Lawson)