International investors increased their investments in equity funds during the week that concluded on November 27, fueled by expectations of strong U.S. economic performance under the Trump administration and aided by declining treasury yields.
Investors injected an impressive $12.19 billion into global equity funds, a rise of 32% compared to approximately $9.24 billion in net inflows the previous week, according to LSEG Lipper data. This represented the ninth consecutive week of inflows.
On Friday, global stock markets were on track for their most successful month since May, propelled by hopes of robust U.S. growth and a surge in artificial intelligence investments, despite apprehensions surrounding political instability and an economic downturn in Europe.
Last week, U.S. President-elect Donald Trump’s selection of fiscal hardliner Scott Bessent as U.S. Treasury Secretary elevated market expectations regarding restrained debt levels in his upcoming term, contributing to a decline in Treasury yields.
Investors positioned $12.78 billion into U.S. equity funds, marking a fourth consecutive week of net investments. However, they withdrew $1.17 billion and $267 million from Asian and European funds, respectively.
The financial sector experienced strong interest, attracting $2.65 billion in net purchases, marking its fifth consecutive weekly inflow. Investors also acquired consumer discretionary, technology, and industrial sector funds amounting to significant totals of $1.01 billion, $807 million, and $778 million, respectively.
Global bond funds experienced inflows for the 49th consecutive week, with investors contributing $8.82 billion to these funds.
Corporate bond funds attracted a net of $2.16 billion, the largest weekly influx in four weeks. Both government bond funds and loan participation funds saw significant purchases, totaling net amounts of $1.9 billion and $1.34 billion, respectively.
Concurrently, investors abandoned $12.87 billion worth of money market funds, marking a second straight week of net withdrawals.
Gold and precious metals funds saw a net gain of $538 million, representing a 14th weekly inflow out of the last 16 weeks.
Data on 29,635 emerging market funds showed that equity funds faced disfavor for a fifth consecutive week, experiencing around $4.3 billion in net withdrawals. Additionally, investors divested $2.58 billion from bond funds, marking a sixth week of net sales.
Europe’s STOXX 600 concluded the week positively, supported by a surge in technology stocks, while investors evaluated the euro zone inflation report to gauge the chances of a larger interest rate reduction in December.
The pan-European main stock index recovered from earlier declines and was up 0.6% at 510.25 points on Friday, achieving its first monthly increase since August. It recorded a rise of 1% in November. On a weekly basis, it showed a slight decline of 0.2%.
The technology sector was the primary contributor to the index’s gains, increasing by 1.6%.
Trading volumes were anticipated to be low, as the U.S. equity market would operate for only half a day following the Thanksgiving holiday on Thursday.
In November, euro zone flash inflation rose to 2.3% year-over-year, consistent with projections.
Markets are currently pricing in an over 80% probability of a 25 basis-point reduction at the European Central Bank’s upcoming meeting on December 12.
Analysts at Capital Economics believe the case for a 50 basis point reduction remains compelling. “Data released this week indicate that the euro-zone economy is facing challenges,” they noted in a report.
While the STOXX 600 has achieved a modest monthly increase over three months, it has significantly underperformed compared to the U.S. S&P 500. Investor confidence in the European bloc has been hindered by various factors, including potential U.S. tariffs, political uncertainty in France, and geopolitical tensions.
Automotive stocks were notably affected in November, weighed down by fears that U.S. President-elect Donald Trump’s proposed tariffs on Mexico could have a more detrimental impact on European car manufacturers than any direct tariffs imposed on EU goods.
In contrast, defense stocks emerged as the top performers among sectors, primarily due to the ongoing Russia-Ukraine conflict.
