World

Global Equity Funds Surge as Investors Bet on Fed Rate Cut and Trump-Xi Trade Deal

Global equity funds saw $10.58B inflows, driven by Fed rate cut hopes & trade deal. Asian funds led with $7.19B.

October 31, 2025, 4:44 PM

President Donald Trump and President Xi Jinping shake hands in front of the US and Chinese flags.

Presidents Trump and Xi Jinping greet each other in South Korea for their first meeting of the second term. By Brian Jason / Shutterstock.com

Executive Summary

Global equity funds attracted $10.58 billion in the week leading up to October 29, marking the sixth consecutive week of inflows, driven by investor anticipation of a U.S. Federal Reserve interest rate cut and a new trade agreement between President Donald Trump and Chinese President Xi Jinping.

The U.S. Federal Reserve reduced interest rates by 25 basis points but tempered expectations for a further rate cut in December due to a lack of sufficient federal government data.

President Trump announced an agreement to reduce tariffs on Chinese imports, with Beijing committing to intensify efforts against illicit fentanyl trade, resume purchases of U.S. soybeans, and ensure the continued flow of rare earth exports.

The Story So Far

Global equity funds attracted substantial investments due to investor anticipation of a U.S. Federal Reserve interest rate cut, which materialized with a 25 basis point reduction, and a new trade agreement between President Donald Trump and Chinese President Xi Jinping that included tariff reductions and new commitments from Beijing.

Why This Matters

The combination of a U.S. Federal Reserve interest rate cut and a new trade agreement negotiated by President Trump with China has significantly boosted global investor confidence, leading to substantial inflows into equity markets, particularly in Asia and the U.S., and sustaining strong interest in bond funds. This market reaction signals a “risk-on” sentiment, with money flowing into sectors like technology and utilities while traditional safe havens such as gold experienced outflows, reflecting optimism about easing trade tensions and a carefully managed monetary policy environment.

Who Thinks What?

Investors anticipated a U.S. Federal Reserve interest rate cut and a new trade agreement between President Donald Trump and Chinese President Xi Jinping, leading to substantial investments in global equity funds.

The U.S. Federal Reserve reduced interest rates by 25 basis points due to easing inflationary pressures, though Fed Chair Jerome Powell tempered expectations for a further rate cut in December.

President Donald Trump reached an agreement with China to reduce tariffs on imports in exchange for Beijing’s commitments on fentanyl, U.S. soybean purchases, and rare earth exports.

Global equity funds attracted substantial investments totaling $10.58 billion in the week leading up to October 29, driven by investor anticipation of a U.S. Federal Reserve interest rate cut and a new trade agreement between President Donald Trump and Chinese President Xi Jinping. This marks the sixth consecutive week of inflows into global equity funds, according to data from LSEG Lipper.

Monetary Policy Shifts and Trade Deal Dynamics

The U.S. Federal Reserve moved to reduce interest rates by 25 basis points on Wednesday, a decision attributed to easing inflationary pressures. However, Fed Chair Jerome Powell tempered expectations for a further rate cut in December, citing a current lack of sufficient federal government data.

Concurrently, President Trump announced on Thursday that he had reached an agreement to reduce tariffs on Chinese imports. In exchange, Beijing committed to intensifying efforts against illicit fentanyl trade, resuming purchases of U.S. soybeans, and ensuring the continued flow of rare earth exports.

Global Fund Flows

Asian equity funds experienced their sharpest weekly inflow since January 2024, attracting $7.19 billion, with approximately $5.46 billion specifically directed towards Japan. U.S. equity funds also saw inflows of $1.81 billion, while European funds secured $137 million.

Within sectoral funds, technology and utilities recorded inflows of $2.54 billion and $504 million, respectively. Conversely, investors divested from gold and precious metals equity funds, leading to an outflow of $1.51 billion.

Global bond funds registered their 28th consecutive week of inflows, accumulating a net $11.84 billion. Euro-denominated bond funds attracted nearly $3.14 billion, while government bond funds and high-yield bond funds saw significant net purchases of $2.84 billion and $1.66 billion, respectively.

Meanwhile, net investments in money market funds moderated to $3.26 billion from $13.56 billion in the preceding week. Gold and precious metals commodity funds recorded a net weekly outflow of $4.17 billion, marking the first net sale in 10 weeks.

Emerging Markets Performance

In emerging markets, investors significantly increased their holdings in equity funds, with inflows reaching $2.23 billion—the highest weekly figure since September 24. However, emerging market bond funds experienced outflows totaling $437 million, according to combined data from 28,822 funds.