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Aug 26 (Reuters) – Global equity funds witnessed their biggest weekly capital withdrawals in five weeks in the week to Aug. 24 on concerns that rate hikes would lead to a recession.

Investors were also wary ahead of the Federal Reserve’s annual Jackson Hole symposium, which could offer insights into the central bank’s future policy path.

According to Refinitiv Lipper, investors disposed of a net USD 10.48 billion worth of global equity funds in the week, which compares with just USD 3.15 billion worth of purchases in the previous week.

Fed Chair Jerome Powell is due to deliver his keynote speech to the symposium on Friday, and investors are likely to scrutinize the comments for any indication on how steep future interest rate hikes would be.

All major regions witnessed equity fund outflows with investors exiting a net USD 5.17 billion, USD 2.19 billion and USD 2.11 billion from Europe, the United States and Asia, respectively.

Among sector funds, tech, industrials and consumer discretionary faced outflows of USD 2.04 billion, USD 735 million and USD 595 million, respectively. Financials sector funds obtained USD 1.85 billion, while utilities received USD 588 million.

Bond funds also recorded withdrawals, amounting to USD 8.41 billion, the biggest for a week since June 29.

Investors sold high yield funds of USD 5.98 billion, marking their biggest weekly net selling since June 15, while government and short- & medium-term funds saw outflows of USD 894 million and USD 153 million, respectively.

Meanwhile, weekly net selling in money market funds eased to a three-week low of USD 375 million.

Commodities funds’ data showed precious metal funds suffered outflows of USD 354 million in a ninth straight week of net selling, while energy funds had a second weekly outgo, although a marginal USD 5 million.

An analysis of 24,457 emerging market funds showed investors sold equity funds of USD 1.34 billion, posting the biggest outflow in five weeks, while also exiting bond funds to the tune of USD 1.05 billion, after three weeks of buying in a row.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Kim Coghill)

Aug 26 (Reuters) – European shares tumbled on Friday, with Germany in the lead as investors fretted over downbeat consumer sentiment data in the continent’s biggest economy, while a reiterated hawkish stance from Federal Reserve Chair Jerome Powell added to fears.

The pan-European STOXX 600 slid 1.7%, closing down 2.6% for the week. Germany’s DAX index ended 2.3% lower, with a weekly fall of 4.2% making it its worst week in more than two months.

German consumer sentiment is set to hit a record low for the third month in a row in September, a new survey showed, as households brace for surging energy bills. In contrast, French consumer confidence unexpectedly rose in August.

“German recession fears just became more intense with the sentiment index falling to a new record low… Germany is particularly reliant on external energy producers, and people are saving at the highest in 11 years, showing consumers are taking precautions in case of the worst case scenario,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.

Comments from Powell did not offer any respite to jittery stock markets as he noted the US economy would need tight monetary policy “for some time” before inflation was under control, which meant slower growth, a weaker job market and “some pain” for households and businesses.

“In less than nine minutes, Chair Powell jawboned the market to avoid discounting their steadfast resolve to move into very restrictive territory and stay there as long as necessary,” said Jeff Klingelhofer, co-head of investments at Thornburg Investment Management.

“Chair Powell threw cold water on the market’s belief that the Fed will move to marginally restrictive policy and then pause.”

Euro zone bond yields rose further following Powell’s comments. Borrowing costs across the bloc had already been pushed higher after a Reuters report that the European Central Bank could debate a 75 basis point rate hike in September.

Elsewhere, regulator Ofgem said British energy bills would rise an eye-watering 80% to an average of 3,549 pounds (USD 4,188) a year from October, calling it a “crisis” that needed to be tackled by urgent government action.

The retail and travel & leisure sectors fell about 3.5% each, the most among European sectors.

Danish brewery Carlsberg slipped 0.3% after saying its Poland subsidiary could cut or halt beer production due to a lack of carbon dioxide deliveries.

Germany’s Salzgitter Maschinenbau Group fell 2.0% after private equity firm Dymon Asia said it was buying the lifting equipment maker’s Singapore unit.

Shares of Britain’s Micro Focus nearly doubled after Canada’s OpenText agreed to buy the enterprise software maker in an all-cash deal for USD 6 billion.

(Reporting by Anisha Sircar and Shreyashi Sanyal in Bengaluru: Editing by Sriraj Kalluvila and Alex Richardson)

TOKYO, Aug 26 (Reuters) – Japanese shares ended slightly higher on Friday after erasing some of their earlier gains, as cautious investors awaited a speech by Federal Reserve Chair Jerome Powell for fresh clues about the path of US monetary policy tightening.

The Nikkei share average ended up 0.57% at 28,641.38, well off the morning session’s high of 28,792.93.

The broader Topix also gave up some of its early gains to close 0.15% higher at 1,979.59.

The market were buoyed by a tech-led rally on Wall Street overnight, amid lower US bond yields as several Fed officials were non-committal about the size of interest rate hike they will approve at their meeting next month.

Powell will speak at the Fed’s annual symposium in Jackson Hole, Wyoming at 1400 GMT.

“The desire to close out positions may be strengthening,” a market participant at a domestic securities company said.

“It’s a difficult environment to take new positions,” a market participant at another securities firm said.

The Nikkei, however, still posted a 1% weekly drop, after a rally for three weeks.

Of the Nikkei’s 225 component stocks, 134 rose versus 83 that fell, while eight were flat.

Industrials made up the best performing sector, followed by basic materials and tech. Energy was the biggest loser, following an overnight decline in crude oil prices.

Chipmaking equipment maker Tokyo Electron was the biggest mover by index points, adding 35 points to the benchmark with a 2.23% gain.

Uniqlo store operator Fast Retailing contributed 33 points, with a 1.1% advance.

Startup investor SoftBank Group also rose 1.19%. That’s after major holding Alibaba rallied following a Wall Street Journal report that the United States and China were nearing an agreement allowing American accounting regulators to travel to Hong Kong to inspect audit records of US-listed Chinese companies.

(Reporting by Tokyo markets team; Editing by Subhranshu Sahu and Rashmi Aich)

SYDNEY, Aug 26 (Reuters) – Asian shares rose on Friday, buoyed by news of possible progress for China and the United States to hammer out an audit deal, while traders anxiously awaited a speech from Federal Reserve Chair Jerome Powell on rate-hike path later in the day.

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.6% in early Asia trade, driven by Chinese tech shares listed in Hong Kong that surged 1.3%. Hong Kong shares of Alibaba were up 4%.

That helped the Asian index eke out a 0.4% gain for the week.

The Wall Street Journal reported on Thursday that Washington and Beijing are nearing an agreement that allows American accounting regulators to travel to Hong Kong to inspect audit records of US-listed Chinese companies.

Hong Kong’s Hang Seng Index .HSI rose 0.7%, Japan’s Nikkei advanced 0.9%, while South Korea gained 0.5%.

Overnight on Wall Street, stocks rose while US Treasury yields slipped, as investors digested comments from Fed officials who continued hammering the point they will drive rates up and keep them there until inflation has been squeezed from the economy.

The S&P 500 climbed 1.4% and the Nasdaq gained 1.67%, lifted by gains in Nvidia and other technology-related stock.

“So it is a fair bet that the Powell speech will take a similar turn today,” said Robert Carnell, regional head of Research, Asia-Pacific, at ING.

“If so, the most likely market reaction would be a rise in yields at both the front and back of the yield curve, a sell-off in equities and dollar strength as markets seem to have been positioning themselves for a more supportive set of comments.”

Investors have pared back expectations the Fed could tilt to a slower pace of rate hikes as US inflation remains at 8.5% on an annual basis, well above the Fed’s 2% target. But Powell’s speech due on Friday will be scrutinised for any indication that an economic slowdown might alter the Fed’s strategy.

Interest rate futures now imply a 60% chance of a 75 bp Fed hike in September FEDWATCH.

“The experience of Jackson Hole 2021 will make the Fed Chair cautious in making the same error twice. That itself argues against his messaging looking too far forward, or, erring on the dovish side,” said Alan Ruskin, macro strategist at Deutsche Bank.

“Markets have however largely taken this on board, which risks a small, short-lived ‘buy the rumour, sell the fact’ technical bond rally, sell the USD, and relief equity trade.”

In the currency markets, the dollar was little changed against a basket of major currencies. The commodity-exposed Australian and New Zealand dollars fell 0.4% versus the greenback after a strong rebound in the previous day.

The yield on benchmark 10-year Treasury notes were up slightly to 3.0425%, compared with its US close of 3.024% the previous day.

The two-year yield, which rises with traders’ expectations of higher Fed fund rates, touched 3.3803%, compared with a US close of 3.374%.

Oil prices recovered some ground on Friday after slumping by about USD 2 a barrel in the previous session on the possible return of sanctioned Iranian oil exports and on worries from rising US interest rates. nL1N30105R

Brent crude LCOc1 rose 0.5% in early Asia trade to USD 99.87 per barrel and US crude was up by a similar margin to USD 96.01 a barrel.

Gold was slightly lower. Spot gold  was traded at USD 1755.4698 per ounce.