(Reuters) -European equity funds came under selling pressure in the week through July 30 as a rally in regional stocks cooled, with investors growing cautious over the uncertain economic implications of the U.S.–EU trade deal and signs of weakening corporate earnings.
However, a record-setting rally on Wall Street drew investors into U.S. equity funds.
According to LSEG Lipper data, investors offloaded a net $41.12 billion worth of European funds in their largest weekly sales since at least 2018 but scooped up U.S. funds worth a net $6.34 billion to end a two week trend of net selling. They also added a net $3.05 billion into Asian funds.
Some European capitals criticized the U.S.-EU trade deal struck last weekend, saying the headline 15% tariff on EU goods, up from a previous average of 1.47%, tilts in favor of the United States and offers little support for the bloc’s economic prospects.
The Stoxx 600 index hit nearly a month’s low of 540.63 on Friday, while the S&P 500 closed 0.37% lower on the previous day’s trade after logging a fresh record high of 6427.02.
Global equity sectoral funds saw a second successive weekly inflow, amounting to $1.65 billion. The financial, tech and industrial sectors received a significant $1.09 billion, $931 million and $691 million, respectively while healthcare witnessed a net $757 million in weekly sales.
Debt oriented funds were popular for the 15th week in a row with a net $15.35 billion worth of investments in global bond funds.
Short-term bond funds saw a massive $3.38 billion weekly inflow following a net $4 billion purchase the prior week. Euro denominated bond funds and government bond funds also witnessed a robust $2.85 billion and $1.5 billion weekly net purchase.
Investors, meanwhile, withdrew $36.02 billion from money market funds in their largest weekly sales since May 28.
In the commodities space, demand for gold and precious metals funds eased to a 10-week low, with a net $285.8 million in net inflows.
Emerging markets saw upbeat demand, with investors snapping up $1.92 billion worth of equity funds, the most since July 2 and plowing in a net $1.31 billion into bond funds, data for a combined 29,684 funds showed.
(Reporting by Gaurav Dogra in Bengaluru; editing by Toby Chopra)
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