Trade agreement optimism ignites the market. Global equity funds see a rebound in weekly inflows.

In the week ending July 23, optimistic expectations for the US trade agreement, better-than-expected US economic data, and positive start to the earnings season boosted market risk appetite, leading to a rise in global equity fund inflows. LSEG Lipper data shows that global investors bought a net of $8.71 billion in stock funds during the week, reversing the trend of net outflows of $4.4 billion in the previous week. Earlier in the week, the US reached an agreement with Japan to reduce import tariffs on Japanese goods to 15%, lower than the previous threatened level. Investors are also expecting the US to reach a consensus with the EU to maintain import tariffs at around 15%. The positive performance of the first batch of earnings reports also reassured investors: Advanced AI chip maker Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) reported record profits, and PepsiCo, Inc., the parent company of PepsiCo, Inc., raised its earnings expectations. European equity funds saw a net inflow of $8.79 billion, reaching a new high in 11 weeks; Asian equity funds attracted a net inflow of $1.17 billion. US equity funds lagged behind, but net outflows narrowed from about $11.67 billion last week to $2.68 billion. The technology sector attracted $1.61 billion, reversing the previous week's net outflow of $576 million; the financial and industrial sectors recorded net inflows of $1.13 billion and $1.61 billion, respectively. Global bond funds continued to attract inflows for the 14th consecutive week, with a net inflow of $17.94 billion for the week. Short-term bond funds received a $4.14 billion injection, the largest in 13 weeks; Euro-denominated bond funds and high-yield bond funds attracted net inflows of $3.89 billion and $2.51 billion, respectively. Gold and precious metal commodity funds saw a net inflow of $1.9 billion, the largest weekly inflow since June 18. Global money market funds recorded a net inflow of $2.09 billion, compared to a net outflow of about $21.78 billion in the previous week. Data covering 29,669 funds shows a renewed interest in emerging market investments: bond funds and equity funds received net inflows of $2.19 billion and $250 million, respectively, reversing the previous week's net outflows of $1.14 billion and $155 million.