Record inflows boost US equities as eurozone inflation surges
US equities have attracted record inflows, with overseas investors pouring $942 billion into American stocks and investment fund shares over the past year, according to data cited by the Financial Times. This surge in investment coincided with strong gains in US stock markets, with the S&P 500 index up 13% year-to-date and the Nasdaq rising 16% in dollar terms. Additionally, the US economy showed stronger-than-expected growth in the second quarter, with GDP revised up to 2.2% on an annualized basis, though this was still lower than the 2.5% rate seen in the first quarter.
Meanwhile, inflation in the eurozone reached a three-year high of 3.8% in September, up from 3.2% in August, driven primarily by rising energy prices. Core inflation, which excludes volatile components like energy and food, rose slightly to 2.5%. Consumer confidence in the eurozone also declined, with the economic sentiment indicator falling to 97.9 in September from 98.4 in August.
The yield on UK 30-year government bonds hit 6% last week, the highest level since 1998, increasing the country's borrowing costs. This move was part of a global bond sell-off triggered by inflation concerns and higher interest rates amid the ongoing Middle East conflict. US 10-year Treasury yields and long-term Japanese government debt yields also reached multi-decade highs.
Investment in artificial intelligence continues to grow, with the 'private fixed investment in information processing equipment and software' component representing 7% of US GDP and 45% of non-residential private fixed investment. This surge in tech investment has significantly contributed to economic growth, with tech accounting for 41% of GDP growth in 2025, compared to an average of 10% from 2011 to 2019.