March 6 - Global investors cut holdings in equity funds for the first time in eight weeks during the seven-day period ending March 4, with escalating tensions in the U.S.-Israeli conflict involving Iran prompting renewed inflation fears and dampening appetite for risk.
U.S. equity funds were hit hardest, posting net sales of $21.92 billion - the largest outflow since January 7 - and driving overall global equity funds to record net outflows of roughly $1.44 billion, according to LSEG Lipper data.
Market participants cited the widening conflict in the Middle East as a catalyst for concerns over a potential global oil price shock. Those concerns dampened equities and raised the prospect that inflation could remain elevated, which in turn may delay expectations for interest-rate cuts.
The MSCI World Index was on track for its worst week since early April 2025, recording declines of more than 2.5% during the week.
Regional flows showed variation. Inflows into European equity funds moderated to $8.8 billion from about $11.88 billion the week before, while Asian equity funds drew $7.43 billion in net new money.
Sector-level flows were mixed. Industrial funds and energy funds attracted net inflows of $2.53 billion and $1.21 billion respectively, while financial sector funds experienced roughly $1.9 billion in net outflows.
Safe-haven demand supported a substantial shift into short-term cash instruments, with money market funds taking in net inflows of $20.22 billion, broadly matching the previous week's inflows. Fixed income also saw continued interest: investors put $16.12 billion into global bond funds, marking the ninth consecutive week of net purchases.
Within bond categories, inflows into short-term bond funds jumped to $3.62 billion from about $1.23 billion a week earlier. Euro-denominated bond funds and corporate bond funds also recorded notable net inflows of $2.31 billion and $2.09 billion respectively.
Commodity fund flows moved in the opposite direction for gold and precious metals, with investors withdrawing roughly $2.62 billion - the second weekly net sale in eight weeks. Emerging market funds showed cooler demand: equity fund inflows slowed to an eight-week low of $5.3 billion, and net purchases in emerging market bond funds eased to $2.5 billion from roughly $3.04 billion the prior week.
The data summarized flows across a combined 28,803 funds.
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