Global equity funds log weekly inflows as AI optimism, Fed cut bets boost sentiment

Sept 26 (Reuters) - Global equity funds recorded net inflows for the first time in three weeks in the week to September 24, as optimism around artificial intelligence investments and renewed bets on potential U.S. rate cuts lifted investor sentiment.

Investors poured a net $28.36 billion into equity funds during the period, largely reversing the prior week’s $35.02 billion outflow, data from LSEG Lipper showed.

Nvidia NVDA.O announced on Monday it planned to invest up to $100 billion in OpenAI, bolstering risk appetite and drawing fresh inflows into equity markets.

Meanwhile, market expectations for a Federal Reserve rate cut in October climbed, with CME's Fed Watch tool showing an 87.7% probability of a 25-basis-point reduction, despite mixed signals from central bank officials.

"We believe the AI revolution, Fed cuts and fading tariff uncertainty will all support growth. Global equities look set to outperform core fixed income for another quarter," said Ajay Rajadhyaksha, global chair of Research at Barclays in a note.

U.S. equity funds received their first weekly inflow in three weeks to the tune of $12.06 billion and led regional net purchases.

European and Asian funds followed with a net $10.73 billion and $4.12 billion, respectively, in weekly investments.

Sectoral funds also saw inflows worth approximately $4.56 billion, with notable purchases of $1.65 billion, $1.45 billion and $1.01 billion, respectively, in the industrials, financials and technology sectors.

Global bond funds, meanwhile, saw a hefty $22.96 billion weekly net investment, the largest figure since at least 2022 amid a robust $10.01 billion weekly inflow in the short-term funds segment.

Euro-denominated bond funds and corporate bond funds were also popular as investors pumped $2.3 billion and $1.95 billion, respectively, into these funds.

Gold and precious metals commodity funds amassed a net $5.05 billion, the biggest amount for a week since September 3.

Investors, meanwhile, withdrew $12.96 billion from money market funds in a second successive week of net sales.

In emerging markets, equity funds drew $2.65 billion, the sixth weekly net investment in a row. Investors also ploughed a net $1.88 billion into bond funds, data comprising a combined 29,710 funds showed.