Global equity funds post 13th straight week of inflows on earnings optimism

Global equity funds recorded a 13th consecutive week of net inflows as investors bet on corporate earnings growth and scaled back expectations for further central bank rate hikes.

Data from fund-tracking firm EPFR Global showed inflows into global equity funds totaling $12.3 billion in the week ending May 10, extending a streak that began in early February. The latest inflow marked the longest uninterrupted period of positive flows since 2021, according to EPFR.

Optimism over corporate earnings has been a key driver, with analysts revising upward profit forecasts for major markets including the U.S., Europe, and Asia. The S&P 500 is projected to post a 5.8% year-over-year increase in earnings for the first quarter, while European benchmarks such as the Euro Stoxx 50 are expected to see a 3.2% rise, EPFR data showed.

Investors have also reduced bets on further monetary tightening, with market pricing indicating a lower probability of additional rate hikes by major central banks. The Federal Reserve’s policy-sensitive two-year Treasury yield fell to 4.01% on Friday, down from 4.15% a week earlier, reflecting expectations that the U.S. central bank may pause its hiking cycle sooner than previously anticipated.

The combination of improving earnings outlooks and shifting interest rate expectations has supported risk appetite, particularly in sectors sensitive to economic cycles such as technology and consumer discretionary. Technology-focused funds saw inflows of $3.7 billion, while consumer discretionary funds attracted $2.1 billion during the week.

Emerging market equity funds also recorded inflows of $1.9 billion, led by allocations to India and Taiwan, as investors sought exposure to higher-growth regions despite ongoing macroeconomic uncertainties.

The sustained inflows contrast with outflows from bond funds, which have faced persistent investor redemptions amid concerns over prolonged high interest rates. Bond funds recorded a 14th straight week of net outflows totaling $8.4 billion in the same period.

Analysts caution that while current trends are encouraging, risks remain. Geopolitical tensions, sticky inflation in some regions, and the potential for unexpected central bank actions could disrupt the flow of funds in the coming months.

For now, the data suggests a cautiously optimistic outlook among global investors, with equity markets benefiting from a supportive mix of earnings momentum and shifting monetary policy expectations.