US Weekly Fundflows Insight Report: Fund Investors And APs Sour On Equities For The Week

For the seventh week in a row, investors were overall net purchasers of fund assets (including those of conventional funds and ETFs), injecting $23.6 billion for Lipper’s fund-flows week ended July 24, 2019. Fund investors were net purchasers of money market funds (+$26.0 billion), taxable fixed income funds (+$4.0 billion), and municipal bond funds (+$2.0 billion, its largest weekly net inflows on record going back to 1992). They were, however, net redeemers of equity funds (-$8.4 billion).

Market Wrap-Up

For the fund-flows week ended July 24, 2019, progress on the U.S./China trade talks, general agreement on the federal budget and debt ceiling, and good Q2 corporate earnings reports generally pushed markets higher. The Russell 2000 Price Only Index (+1.91%) witnessed the largest gain for the fund-flows week, followed by the NASDAQ Composite Price Only Index (+1.67%) and the S&P 500 Price Only Index (+1.18%). Overseas, the Shanghai Composite Price Only Index suffered the only negative returns, declining 0.21% for the week, while the Nikkei 225 Price Only Index (+1.14%) experienced the strongest return of the broad-based indices.

On Thursday, July 18, stocks snapped a two-day losing streak after New York Federal Reserve President John Williams said aggressive action by the central bank should be undertaken at the first sign of a slowdown, which was well received by investors. However, on Friday, stocks dipped on speculation that the Fed would only cut its prime lending rate by 25 basis points (bps) during its July meeting rather than the 50 bps that some pundits had anticipated.Oil prices rallied after reports that Iran had seized a British oil tanker in the Strait of Hormuz, increasing geopolitical concerns.

On Monday, July 22, stocks rallied on a better-than-expected Q2 earnings season and on hopes of a rate cut at the end of the month. Of the 185 S&P 500 constituents that have reported Q2 earnings thus far, 75% have beaten analyst expectations, according to Refinitiv’s Proprietary Research team. In addition, investors were cheered by the news that a face-to-face meeting between Chinese and U.S. trade negotiators was set for next week. While remaining somewhat range-bound, stocks advanced on Tuesday after congressional leaders announced a budget deal with the White House that will raise the government’s debt ceiling, removing one more possible stumbling block going forward. However, rising geopolitical tensions surrounding Iran and the Strait of Hormuz roiled energy prices. On Wednesday, July 24, the S&P 500 and NASDAQ indices closed at record highs despite mixed economic news. However, oil prices slid as investors once again assessed the impact lower energy demand would have on prices.

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