The victory of centrist Emmanuel Macron over anti-EU candidate Marine Le Pen in the first round of the French presidential election boosted investors' confidence and their appetite for international equities in the past week.
Data from Thomson Reuters' Lipper service show that investors poured $1.8 billion into U.S.-based international-focused stock funds in the week ended April 26, compared with $1.3 billion of inflows in the week preceding the election. This marks the sixth consecutive week of gains. "While markets had deemed a Marine Le Pen-Emmanuel Macron run-off as the most likely outcome, there was an element of uncertainty. That uncertainty is gone and investors feel more comfortable increasing their exposure to international equities," Thomson Reuters Lipper head of research services Tom Roseen said.
A total of $720 million flowed into U.S.-based European stock funds in the past week, up from just $108 million before the election, causing Germany's DAX Index to rally as much as 5.37 percent from April 19 to April 26. U.S.-based stock funds as a whole drew in $7.2 billion in the period, the biggest amount in seven weeks, with most of the cash benefiting exchange-traded funds instead of mutual funds. Stock ETFs attracted $12.7 billion over the week, whereas stock mutual funds saw $5.5 billion in outflows.
Taxable bond funds also continued their weekly gains for the sixth straight week, pulling in $6.3 billion, while another $4.7 billion went into corporate investment-grade bond funds -- the biggest inflow in five weeks.