Global investors pulled money from stock funds for the first time in nearly two months as escalating tensions in the Middle East weighed on market sentiment.

Data from LSEG Lipper showed global equity funds experienced net outflows of roughly $1.44 billion in the week ending March 4.

The shift in flows came as the conflict involving the U.S., Israel, and Iran intensified, raising concerns about higher oil prices, persistent inflation, and the potential delay of interest-rate cuts.

U.S. Funds Lead the Selloff

The largest withdrawals occurred in U.S. stock funds, where investors pulled approximately $21.92 billion.

The outflow marked the biggest weekly withdrawal from U.S. equity funds since early January and reflected growing caution among investors amid geopolitical risks.

The broader MSCI World Index is on track for its worst weekly performance since April 2025, falling more than 2.5% during the period.

Regional Flows Show Mixed Trends

While U.S. funds saw heavy outflows, flows into other regions remained positive but slowed.

European equity funds attracted around $8.8 billion in inflows, down from roughly $11.88 billion the previous week.

Asian equity funds also drew investment, receiving about $7.43 billion in net inflows during the week.

Sector Rotation Toward Energy and Industrials

Sector-specific funds reflected a shift toward industries that may benefit from geopolitical uncertainty.

Funds focused on industrial companies and energy stocks attracted net inflows of about $2.53 billion and $1.21 billion respectively.

Meanwhile, financial sector funds saw withdrawals totaling roughly $1.9 billion.

Investors Move Toward Safer Assets

Rising geopolitical risks pushed investors toward safer assets.

Money market funds saw inflows of approximately $20.22 billion, while global bond funds attracted about $16.12 billion for a ninth consecutive week of net purchases.

Short-term bond funds experienced particularly strong demand, with inflows rising to $3.62 billion during the week.

Gold Funds See Withdrawals

Despite broader risk aversion, commodity funds focused on precious metals recorded net outflows of roughly $2.62 billion.

Emerging market equity funds also experienced slower inflows, dropping to an eight-week low of $5.3 billion.