Optimism in Global Stock Markets: New Impetus from AI and Interest Rate Speculations

In a remarkable reversal, global equity funds recorded net inflows for the first time in three weeks, primarily driven by positive expectations surrounding investments in artificial intelligence and potential interest rate cuts in the United States. According to LSEG Lipper data, investors poured a net of $28.36 billion into equity funds in the week leading up to September 24, almost a turnaround from the $35.02 billion outflow in the previous week. Notably, Nvidia announced plans to invest up to $100 billion in the company OpenAI. This news bolstered investors' risk appetite, leading to fresh inflows into the equity markets. Expectations for an interest rate cut by the U.S. Federal Reserve in October also rose, despite mixed signals from the central bank. The CME Fed Watch tool estimated the likelihood of a 25 basis point rate cut at 87.7%. Ajay Rajadhyaksha, global head of research at Barclays, emphasized the drivers behind the growth in a statement: "We believe the AI revolution, Fed cuts, and easing trade tariffs will all support growth. Global equities appear determined to outperform core bonds in the next quarter." U.S. equity funds triumphed for the first time in three weeks with an inflow of $12.06 billion, leading regional net investments. European and Asian funds followed with inflows of $10.73 billion and $4.12 billion, respectively. Sector-based funds also attracted investments of around $4.56 billion, with the industrial, financial, and technology sectors particularly impressing with purchases of $1.65 billion, $1.45 billion, and $1.01 billion. Meanwhile, global bond funds registered the largest weekly net investment amount since at least 2022, with $22.96 billion, supported by strong inflows into short-term funds. Euro-denominated bond funds and corporate bond funds also experienced surges in popularity, with inflows of $2.3 billion and $1.95 billion, respectively. Meanwhile, gold and precious metal commodity funds reported net inflows of $5.05 billion—the highest weekly figure since September 3. On the other hand, money market funds saw outflows for the second consecutive week, with $12.96 billion being withdrawn. In emerging markets, equity funds registered the sixth consecutive weekly net inflow with $2.65 billion, while investors also net invested $1.88 billion in bond funds.