Panic spreads in the technology sector, global equity fund inflows plunge by 86%
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- As of the week ended June 24, global equity funds saw net inflows of only $7.51 billion—a sharp drop of about 86% from $55.53 billion the previous week. Risk appetite cooled dramatically, mainly due to market concerns over debt-driven expansion of technology spending, while the Federal Reserve's hawkish stance continued to weigh on sentiment.
- Technology sector funds experienced a single-week net outflow of $17.83 billion, almost completely reversing the $21.5 billion net inflow from the prior week. Large tech companies such as SpaceX continuously entered the bond market for financing, raising investor caution towards the industry's increasing reliance on borrowing amid the investment boom.
- The May PCE year-on-year rose to 4.1%, marking the highest since April 2023 and strengthening market expectations that the Federal Reserve could raise rates by 25 basis points within the year. U.S. equity funds registered a net outflow of $3.53 billion for the week, while inflows into European and Asian equity funds fell notably from $11.71 billion and $3.82 billion in the previous week.
- Bond funds saw net inflows for the twelfth consecutive week, increasing by $10.85 billion during the week. Hard currency bond funds, short-term bond funds, and U.S. dollar-denominated medium-term bond funds attracted $3.1 billion, $2.42 billion, and $1.87 billion respectively, indicating continued pursuit of a balance between yield and safety.
- Money market funds suffered net outflows of $42.8 billion, the largest single-week redemption since April 15. Gold and other precious metal funds recorded net outflows for the sixth consecutive week, with $545 million net sold during the week, and energy funds ended their previous two-week inflow streak.
- Emerging market equity funds experienced net selling for the ninth consecutive week, with net outflows of $3.39 billion, but bond funds managed a net inflow of $13.2 million—the first in three weeks. The differentiated allocation patterns of capital across asset classes became increasingly apparent.
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