Equity funds worldwide receive increased investments amid hopes for a trade agreement
In the week through July 23, 2025, global equity markets experienced a significant boost as investors' risk sentiment improved. The net inflow of about US$8.71 billion into global equity funds marked a reversal from the prior week’s net withdrawal, primarily due to optimism over U.S. trade deals, stronger-than-expected U.S. economic data, and an encouraging start to the corporate earnings season.
One of the key drivers behind this growth was the U.S.-Japan trade deal. The agreement, which reduced import tariffs on Japanese goods to 15%—lower than the initially threatened 25%—provided a major trade policy tailwind. Investors were also hopeful about a similar deal between the U.S. and the European Union, with tariff levels near 15% being discussed.
Positive initial earnings reports from companies such as TSMC—an AI chip maker—and PepsiCo, a major beverage company, further supported investor confidence. These encouraging corporate earnings contributed to the overall optimism.
Stronger-than-expected U.S. economic reports and a reduction in implied volatility after an earlier surge also played a role in maintaining optimism. Hedge fund performance was robust, reflecting adaptive portfolio repositioning amid evolving conditions.
Non-U.S. equities outperformed, with European equity funds experiencing an 11-week high inflow of US$8.79 billion. The technology and industrial sectors saw net additions of $1.61 billion each, while the financial sector experienced a net addition of $1.13 billion.
In addition to equity markets, net purchases of global bond funds extended into a 14th week, adding $17.94 billion. High-yield funds recorded a net inflow of $2.51 billion, and gold and precious metals commodity funds saw a net $1.9 billion worth of purchases.
Emerging markets also saw a revival in buying interest, with investors adding bond funds of $2.19 billion and net purchases of $250 million in equity funds. The technology sector reversed a previous week's net outflow of $576 million, with a net addition of $1.61 billion.
However, U.S. equity funds experienced net outflows of $2.68 billion, a decrease from about $11.67 billion the prior week. Global money market funds drew a net $2.09 billion after about $21.78 billion of net sales a week ago. Asian funds drew a net $1.17 billion during the same period.
Investors are hopeful about the prospects of the U.S. and the European Union settling on U.S. import tariffs of around 15%, which could further boost global equity markets. As the corporate earnings season continues and trade policies continue to evolve, it will be interesting to see how these trends develop in the coming weeks.
- The improvement in investors' risk sentiment and the optimism surrounding U.S. trade deals, stronger-than-expected U.S. economic data, and the encouraging start to the corporate earnings season stimulated significant investments in various business sectors.
- The robust performance of hedge funds was a reflection of adaptive portfolio repositioning in the finance industry amid evolving conditions, contributing to the overall positive sentiment in the global equity markets.
