Investors pull money from equity funds as rising oil prices fuel inflation fears

In the week ending September 9, global equity funds experienced significant outflows totaling $15.52 billion, marking the largest decrease since March 18. This trend was primarily driven by net sales of $32.27 billion in U.S.-based equity funds. European and Asian equity funds, however, saw net inflows of $11.16 billion and $3.03 billion, respectively.

The surge in oil prices, which hit a four-month high of $109.97 a barrel on Friday, exacerbated concerns about inflation and rising borrowing costs. These fears were further fueled by the U.S. producer price report released on Thursday, which indicated that inflation remained steady in August, suggesting a possible interest rate hike by the Federal Reserve in the following week.

Despite these concerns, sectoral funds attracted net inflows of $2.92 billion, with significant purchases in technology and financials. Bond funds, on the other hand, received $8.95 billion in inflows, the lowest amount for a week since July 29. Investors also displayed a preference for short-term bonds, money market funds, and government bonds, while selling off corporate bonds.

Commodity funds, with a focus on gold and precious metals, experienced a decline with net sales of $537 million, ending an eight-week streak of inflows.