Investors last week bet big on the sectors they anticipate will benefit the most from US President Donald Trump’s revived tax reform and deregulation agendas. Financial, Healthcare/Biotechnology and Technology Sector Funds recorded their biggest inflows in eight, 12 and 18 weeks, respectively.
Meanwhile, investors anticipating the U.S. Federal Reserve would unveil its plan for unwinding its balance sheet at its September meeting last week got what they expected. With the impact of that unwinding on interest rates and mortgages still unclear, Real Estate Sector Funds posted outflows for the fourth time in the past five weeks.
Less anticipated was the Fed's affirmation that further interest rate hikes this year and next remain on the cards, something that could weigh on Utilities, Consumer Goods, Gold and Real Estate Funds in coming weeks.
Industrial Sector Funds, meanwhile, continue to see a combination of profit taking and some short covering. This fund group, which has racked up a collective gain approaching 40 percent since Trump's election last year, is currently experiencing its longest run of outflows since the end of 2015.
Industrials are among the top five US sectors in terms of predicted third quarter earnings growth, along with energy, technology, healthcare and commodities.