Soaring oil prices fuel inflation concerns, global equity funds see highest outflows in nearly six months

(1) As of the week ending September 9, global equity funds saw significant capital outflows amid soaring oil prices and increased tensions between the US and Iran, which heightened concerns over rising inflation and borrowing costs. (2) Institutional data shows that global equity funds experienced a net outflow of approximately $15.5 billion that week, the largest since mid-March, primarily due to net sales of about $32.3 billion from US equity funds. (3) In contrast, European and Asian equity funds recorded net inflows of about $11.2 billion and $3 billion respectively, highlighting a clear divergence in capital flows across regions. (4) On Friday, Brent crude oil hit a four-month high near $110 per barrel, having already surpassed the $100 mark earlier in the week, fueling worries that inflation would remain elevated and prompting major central banks to raise interest rates. (5) The US producer price report released on Thursday showed inflation remained robust in August, further reinforcing expectations of a Federal Reserve rate hike next week ahead of Friday’s consumer price data. (6) Sector funds attracted a total net inflow of approximately $2.9 billion, with the technology and financial sectors receiving about $1.9 billion and $1.3 billion respectively, becoming safe havens for capital. (7) Global bond funds attracted about $9 billion, the smallest weekly inflow since the end of July, while short-term bond funds recorded around $6.7 billion, the second highest in three months. (8) Investors also bought about $1 billion in loan participation funds and $700 million in government bond funds, while selling approximately $2.4 billion in corporate bond funds. (9) Money market funds attracted inflows for the second consecutive week, receiving around $10.7 billion during the week. (10) Among commodity funds, gold and precious metals funds saw a net sale of approximately $500 million after eight consecutive weeks of inflows, while energy funds attracted about $200 million. (11) Emerging markets ended eight consecutive weeks of net buying, with a net sale of approximately $1.6 billion that week; however, bond funds saw a net inflow of about $500 million for the sixth consecutive week.