International stock funds received their largest weekly investment in over two months during the week ending March 25, as President Donald Trump postponed planned military strikes against Iran’s energy infrastructure, sparking optimism about reduced Middle East tensions and alleviating concerns over potential oil market disruptions.
According to LSEG Lipper data, investors moved a net $37.77 billion into worldwide equity funds, marking the biggest weekly investment since February 18 and breaking a two-week pattern of selling activity.
U.S. stock funds dominated the inflows, receiving $37.24 billion in net investments as a three-week selling period came to an end. Asian equity funds also performed well with $5.23 billion in weekly inflows, while European funds experienced outflows totaling $7.52 billion.
Despite the positive investment flows, international stock markets dropped approximately 1.6% on Thursday following Iran’s rejection of any diplomatic discussions with the United States, raising questions about the likelihood of a rapid ceasefire in the Middle East conflict that has continued for nearly a month.
Mark Haefele, chief investment officer at UBS Global Wealth Management, cautioned investors against expecting energy shipments through the Strait of Hormuz to resume quickly, although he doesn’t anticipate major or prolonged economic harm under most scenarios.
“This means long-term investors with well-diversified portfolios should stay invested,” UBS’s Haefele said.
Interest in bond-related investments dropped to its lowest point in almost three months, with only $2.53 billion flowing into international bond funds.
High-yield and euro-denominated bond fund categories experienced substantial withdrawals of $4.75 billion and $2.11 billion respectively, while short-term bond funds attracted a record-breaking $11.1 billion in investments.
Money market funds saw approximately $64.78 billion in withdrawals, ending an eight-week streak of net investments.
Gold and precious metals funds continued their decline for a fourth consecutive week, losing $3.14 billion in investments.
Emerging market investments faced selling pressure for the third straight week, with $2.78 billion pulled from stock funds and $1.73 billion withdrawn from bond funds, according to data covering 28,796 combined funds.
