Global equity funds attracted fresh inflows for an eighth consecutive week through July 15 as easing U.S. inflation, robust corporate earnings and renewed optimism around artificial intelligence encouraged investors to increase exposure to risk assets, although the pace of buying slowed from the previous week.
According to LSEG Lipper data covering 28,904 funds, investors purchased a net $12.46 billion of global equity funds during the week, following a much stronger $48.35 billion of inflows the previous week.
The continued inflows suggest that investors remain constructive on equities despite elevated valuations and lingering geopolitical risks, including tensions involving Iran and uncertainty surrounding global trade. The moderation in weekly purchases appears to reflect profit-taking after the previous week’s surge rather than a broader deterioration in market sentiment.
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Europe Leads Equity Inflows As Investors Rotate Globally
European equity funds emerged as the biggest beneficiaries of global investor flows, attracting $9.49 billion, while Asian funds drew $5.4 billion.
In contrast, U.S. equity funds experienced $4.8 billion in net outflows, indicating investors may be rotating geographically after a prolonged period of U.S. market outperformance.
The shift comes as European equities benefit from improving corporate earnings and relatively attractive valuations compared with U.S. stocks, where technology companies continue to dominate market performance and trade at historically elevated multiples.
The strong start to the second-quarter earnings season also helped reinforce confidence in global equities. Several major Wall Street banks, including Bank of America, JPMorgan Chase, and Morgan Stanley, reported stronger-than-expected results, easing concerns that higher interest rates and slowing economic growth would significantly weaken corporate profitability.
Investor sentiment also received a boost from Dutch semiconductor equipment maker ASML, whose quarterly earnings exceeded expectations. The company raised its 2026 outlook and announced plans to expand manufacturing capacity, boosting confidence that investment in artificial intelligence infrastructure remains robust despite earlier concerns that AI spending had outpaced fundamentals.
Technology remained the most popular sector among investors, attracting $3.37 billion during the week. Although that represented the sector’s smallest weekly inflow in three weeks, it demonstrates that AI-related investments continue to dominate equity allocations globally.
Financial sector funds received $567 million in net inflows, supported by strong earnings from major banks, while healthcare funds attracted $558 million as investors continued to seek defensive growth opportunities alongside cyclical exposure.
A key catalyst behind the improved market sentiment was softer-than-expected U.S. inflation data.
June consumer price figures showed headline inflation falling 0.4%, marking the first monthly decline since the COVID-19 pandemic, while core inflation remained unchanged. The report strengthened expectations that the Federal Reserve may not need to resume interest rate increases in the near term.
Lower inflation expectations pushed Treasury yields and the U.S. dollar lower earlier in the week, improving financial conditions and supporting equity valuations.
Although Federal Reserve policymakers cautioned that a single inflation report was insufficient to declare victory over inflation, investors interpreted the data as reducing the likelihood of additional monetary tightening this summer.
Bond Demand Remains Resilient As Cash Leaves Money Markets
Fixed-income funds also continued to benefit from shifting investor allocations. Global bond funds recorded $16.16 billion in net inflows, extending their buying streak to 15 consecutive weeks, underscoring persistent demand for high-quality fixed-income assets even as equity markets continue to rally.
Government bond funds attracted $3.38 billion, marking their strongest weekly inflow since April 8, as investors increased allocations to sovereign debt amid expectations that interest rates may have peaked in several major economies.
Short-duration bond funds also remained popular, drawing $4.17 billion, reflecting continued investor preference for lower-duration assets that offer attractive yields while limiting exposure to future interest rate volatility.
The bond inflows coincided with a sharp withdrawal from money market funds. Investors pulled $102.53 billion from cash funds, the largest weekly outflow since April 15, suggesting capital is increasingly moving out of defensive cash positions and back into both equities and fixed income as confidence in financial markets improves.
Commodity fund flows painted a mixed picture.
Gold and precious metals funds attracted $376 million, ending an eight-week streak of investor withdrawals. Renewed interest in precious metals likely reflected continued geopolitical uncertainty and a weaker U.S. dollar following the inflation data.
Energy funds, however, recorded $145 million in net outflows despite elevated oil prices, indicating that investors remain cautious about the sector’s longer-term outlook amid uncertainty over global economic growth and energy demand.
Emerging markets also showed signs of renewed investor confidence.
Emerging-market equity funds attracted $2.74 billion, ending an 11-week streak of outflows, while emerging-market bond funds recorded $795 million in fresh inflows.
The turnaround suggests investors are gradually rebuilding exposure to developing economies as expectations grow that the Federal Reserve may adopt a less restrictive monetary stance. Historically, easing U.S. monetary conditions tend to support emerging-market assets by reducing pressure on local currencies, lowering financing costs, and encouraging capital inflows.
Together, the latest fund flow data indicate that investors remain broadly optimistic about global markets. Strong corporate earnings, resilient AI-related investment, moderating inflation and expectations of a less aggressive Federal Reserve continue to underpin demand for both equities and bonds.