Middle East conflict triggers safe-haven sentiment: Global stock funds see first outflow in eight weeks, with US stocks losing $21.9 billion.

Due to the escalating conflict between the US and Israel with Iran, exacerbating inflation concerns and suppressing risk appetite, global investors reduced their holdings in stock funds for the first time in eight weeks as of the week ending March 4. Data from the London Stock Exchange Group (LSEG) Refinitiv showed that US stock funds led the way, with a net sell-off of $21.92 billion during the week, marking the largest single-week outflow since January 7 and dragging the overall global stock funds to record a net outflow of around $1.44 billion. The ongoing Middle East conflict has raised concerns about global oil price shocks, putting pressure on the stock market and exacerbating market worries about inflation and the possibility of the Fed delaying rate cuts. The MSCI global index fell more than 2.5% this week, on track to deliver its worst single-week performance since early April 2025. Meanwhile, inflows into European stock funds slowed to $8.8 billion from around $11.88 billion the previous week, while Asia funds attracted a net inflow of $7.43 billion. In terms of sector funds, the industrial sector and energy sector each recorded net inflows of $2.53 billion and $1.21 billion, while financial sector funds experienced an outflow of around $1.9 billion. Safe-haven demand drove net inflows into money market funds to rise to $20.22 billion, roughly unchanged from the previous week. Investors also injected $16.12 billion into global bond funds, marking a ninth consecutive week of net inflows. Inflows into short-term bond funds surged from around $1.23 billion a week ago to $3.62 billion. Euro-denominated bond funds and corporate bond funds also recorded significant net inflows of $2.31 billion and $2.09 billion respectively. On the other hand, investors sold off around $2.62 billion in gold and other precious metal commodity funds, marking the second week of net outflows in eight weeks. For emerging markets, data showed that of the 28,803 funds tracked, overall inflows into stock funds fell to $5.3 billion, a low in eight weeks; net inflows into bond funds also slowed from around $3.04 billion the previous week to $2.5 billion.