Chart – Concerns over the midterm elections and capital consumption in the field of artificial intelligence have driven a surge in net inflows into U.S. money market funds

Reuters, November 6 - For the week ending November 4, U.S. money market funds recorded the largest weekly net inflow in six months, driven by cautious sentiment ahead of the U.S. midterm elections and concerns about increased AI spending and cash burn by major tech mega-caps (link), which boosted demand for safe-haven assets.

According to LSEG Lipper data, investors made a net investment of $117.97 billion into U.S. money market funds for the week, marking the largest single-week net inflow since May 6.

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U.S. equity funds attracted $14.81 billion in net inflows, reversing the previous week's net outflow of $6.54 billion, thanks to a decline in energy prices and Treasury yields retreating from their October highs, which lifted market sentiment.

In Tuesday's U.S. midterm elections, the Democratic Party (link) won control of both chambers of Congress, raising market concerns that increased regulatory scrutiny (link) could dampen the rapid expansion of the AI industry.

These concerns weighed on the market on Thursday, as the Nasdaq Index .IXIC, S&P 500 Index .SPX, and Dow Jones .DJI Industrial Average dropped by 5.52%, 4.36%, and 3.44%, respectively.

During the week, investors made net purchases of $10.35 billion in U.S. large-cap funds, $1.64 billion in multi-cap funds, and $422.77 million in small-cap funds, while recording net sales of $1.07 billion in mid-cap funds.

Among U.S. sector funds, technology, industrial, and communication services sector funds saw outflows of $160.23 million, $624.67 million, and $965.68 million, respectively. By contrast, financial and healthcare sector funds attracted inflows of $1.3 billion and $1.09 billion.

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U.S. bond funds recorded net inflows of $7.31 billion, the highest in four weeks.

Domestic general taxable fixed income funds and long-term government and Treasury funds received notable inflows of $2.72 billion and $2.66 billion, respectively. Investors also bought $794.32 million worth of short- to medium-term government and Treasury funds.

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