US equity funds see weekly outflows on geopolitical, rate worries

Jan 9 (Reuters) - U.S. equity funds saw sizeable outflows in the seven days through January 7, as investors turned ​cautious over deepening global tensions and ahead of the ‌U.S. jobs report, seen as one of the factors influencing the Federal Reserve’s rate ‌outlook.

Investors also awaited a Supreme Court ruling on the legality of President Donald Trump's sweeping tariffs that jolted markets last year.

According to LSEG Lipper data, investors withdrew a net $26 billion from U.S. equity funds ⁠during the week in ‌their first weekly net sales since December 17.

U.S. large-cap funds were under pressure as investors withdrew $31.75 billion ‍from these funds, the biggest amount for a week since September 17. Small-cap and mid-cap funds also saw $3.43 billion and $1.31 billion worth of net outflows.

Investors, ​however, poured $5.32 billion into sectoral funds. They bought industrial, tech ‌and financial sector funds of $1.69 billion, $1.32 billion and $1.3 billion, respectively.

U.S. job growth slowed more than expected in December amid business caution about hiring because of import tariffs and rising artificial intelligence investment, but the unemployment rate dipped to 4.4%, supporting expectations the Federal Reserve ⁠would leave interest rates unchanged this ​month.

Money market funds, meanwhile, attracted $53.35 billion in ​a second successive week of net purchases.

U.S. bond funds also saw a renewed demand as investors pumped $9.27 billion ‍into these funds ⁠after a net $2 billion worth of weekly withdrawals.

Demand for short-to-intermediate investment-grade funds surged to a six-month high as these funds ⁠drew $4.12 billion.

General domestic taxable fixed income funds and short-to-intermediate government and treasury funds ‌also saw significant inflows of $1.58 billion and $1.51 billion, respectively.

(Reporting ‌by Gaurav DograEditing by Tomasz Janowski)