Global equity funds draw inflows for second week as AI optimism holds

• Major US hyperscalers are projected to spend $800 billion on capital expenditure in 2026, rising to $1.1 trillion in 2027, according to Goldman Sachs, supporting continued AI investment optimism
• Technology sector funds saw $2.63 billion in outflows after a three-week buying streak, while financial and utility funds attracted $1.13 billion and $468 million respectively
• Money market funds experienced their largest weekly withdrawal since April 15 with $116.52 billion in outflows, while emerging market equity funds recorded a fourth consecutive week of outflows totaling $1.37 billion

Global Equity Funds Draw Inflows for Second Week on AI Optimism

Key Flows and Figures:

Global equity funds attracted $34.76 billion in net inflows for the week ending September 30, down from $44.31 billion the previous week, marking the second consecutive week of positive flows. US equity funds led with $20.6 billion in purchases, while European and Asian funds drew $6.19 billion and $6.16 billion respectively.

AI Investment Driving Sentiment:

Investor optimism centered on artificial intelligence spending, bolstered by Micron Technology's better-than-expected quarterly revenue showing strong demand for AI memory chips. Goldman Sachs projects US hyperscalers will spend approximately $800 billion on capital expenditure in 2026, rising to $1.1 trillion in 2027. Strong revenue backlogs and supply constraints continue supporting investment, with cloud revenue growth accelerating sharply this year.

Inflation and Rate Environment:

US Commerce Department data showed August inflation rose less than expected, with July figures also revised lower, reducing pressure on the Federal Reserve to raise rates in October.

Sector Performance:

Technology funds experienced $2.63 billion in outflows after a three-week buying streak, contributing to overall sectoral fund outflows of $919.7 million. Financial and utility funds attracted $1.13 billion and $468 million respectively.

Fixed Income and Other Assets:

Global bond funds drew $4.76 billion, down from $9.24 billion previously. Short-term and government bonds attracted $5.43 billion and $4.13 billion, while high-yield bonds saw $2.29 billion in outflows. Money market funds posted their largest weekly withdrawal since April 15 at $116.52 billion.

Emerging Markets:

EM equity funds recorded $1.37 billion in outflows for the fourth consecutive week, with bond funds seeing $1.75 billion in withdrawals.