(Reuters) - Global investors reduced their holdings in equity funds in the week leading up to Jan. 24, exercising caution before a pivotal inflation report due on Friday and a meeting of the U.S. Federal Reserve next week, which could reshape expectations about the pace and extent of interest-rate cuts.
Despite this, a surge in global stocks limited fund outflows, spurred by optimism after strong quarterly results from Netflix (NASDAQ:NFLX) and bullish forecasts from semiconductor companies, including Taiwan's TSMC and Super Micro Computer.
According to data from LSEG, global equity funds experienced $2.19 billion in net outflows during the week, marking the smallest weekly outflow in four weeks.
Investors sold U.S. and European funds of about $3.04 billion and $2.12 billion, respectively, on a net basis. Conversely, Asian funds drew a net $2.35 billion in buying as inflows extended to a third successive week.
The tech sector gained $2.47 billion amid optimism over upbeat forecasts, the biggest inflow since Nov. 22, 2023. The healthcare and energy sectors, meanwhile, saw $552 million and $593 million worth of net selling, respectively.
Debt funds attracted increased interest, with global bond funds registering $9.34 billion in inflows, marking the fifth consecutive week of positive inflows.
Short-term global bond funds received $5.29 billion, the largest inflow since Oct. 11, 2023. High-yield funds saw net purchases of $880 million.
Concurrently, investors pulled a net $18.27 billion out of money market funds, staying net sellers for a second successive week.
In the commodities segment, precious metal funds attracted $209 million, their first weekly inflow in four weeks. Energy funds also saw about $54 million worth of net buying.
Data covering 27,956 emerging market funds showed investors offloaded a net $2.83 billion worth of equity funds during the week, the biggest net selling in five weeks. Bond funds also witnessed net selling, worth about $790 million.