AI Optimism Fuels Risk Appetite, Global Equity Funds See Largest Inflows in Three Weeks

Global equity funds saw a significant surge in investor demand, as strong appetite for artificial intelligence (AI)-related tech products and cooling expectations of U.S. Federal Reserve (Fed) rate hikes boosted risk sentiment. For the week ending July 8, global equity funds recorded net inflows of $492.3 billion, marking the largest single-week inflow in three weeks.

According to data from Lipper, a subsidiary of the London Stock Exchange Group (LSEG), the recently released June manufacturing activity reports showed optimistic readings, indicating sustained strong demand for AI-related products such as chips and computers, further bolstering investor confidence.

Robust earnings expectations for the AI sector's Q2 results also supported market sentiment. Based on LSEG's compilation of analyst consensus estimates, the technology sector is expected to see net profits rise 54.2% year-on-year in Q2, suggesting that the AI boom is not only inflating stock valuations but also that investors anticipate corporate earnings will validate the rally.

By region, U.S. equity funds attracted $249.7 billion in inflows—the highest in three weeks—while European and Asian equity funds saw net inflows of $136.7 billion and $69.5 billion, respectively, indicating broad-based investor interest across major markets.

By sector, technology funds were the biggest winners, drawing $114.9 billion in a single week—an increase of over 25% from the previous week's $88.8 billion. Financial and industrial equity funds also attracted inflows of $15.2 billion and $7.89 billion, respectively.

Notably, capital flowed not only into risk assets: global bond funds attracted $313.4 billion in net inflows during the same period, the highest since at least 2019. Short-term bond funds pulled in $71.9 billion, while euro-denominated bond funds, corporate bond funds, and government bond funds saw net purchases of $38.7 billion, $29.2 billion, and $27.3 billion, respectively.

At the same time, investors poured $837.6 billion into money market funds, the largest weekly net inflow since June 3, reflecting that while chasing AI-driven market gains, investors are still allocating substantial capital to highly liquid assets.

In contrast, gold and other precious metals commodity funds experienced outflows for the eighth consecutive week, losing $372 million in a single week. Data covering 28,884 funds in emerging markets showed equity funds lost about $500 million in outflows—marking the 11th consecutive week of withdrawals—while bond funds still attracted $16.6 billion in net inflows.