Investors might be recovering from a case of whiplash today, as a surprising move from Spain and rising optimism surrounding possible Chinese stimulus measures brought momentum back to the markets. The Spanish government unveiled today a 2013 budget plan, which includes over $16 billion of spending cuts and tax increases aimed at persuading the European Union that the country is on track to meet its deficit-reduction targets. Adding to Wall Street’s sense of relief was China’s central bank injecting a record amount of liquidity into the banking system this week, leading many investors to believe that additional stimulus measures are on the way [see also 7 Simple & Cheap All-ETF Model Portfolios].
Global Market Overview: Spain Makes Bold Move
All three major U.S. stock indexes closed higher, despite U.S. GDP coming in at its slowest pace since the third quarter of 2011, durable goods orders declining, and pending home sales dropping in August. As the poor data was ignored, Nasdaq (QQQ) came out on top with its 1.39% gain. The Dow Jones Industrial Average (DIA) landed in positive territory for the first time in five sessions, while the S&P 500 (SPY) also snapped its 5-day slump. In Europe, stocks were broadly higher, but Spain’s IBEX slipped 0.2% after details of the budget plan were revealed, eroding investor confidence. Asian equities rallied after China’s liquidity injections and renewed optimism for additional stimulus; the Shanghai Composite jumped 2.6%, while Japan’s Nikkei Stock Average inched 0.5% higher.
Bond ETF Roundup
U.S. Treasuries snapped their longest winning streak since May 2011 today, as investors jumped in on the stock rally. Relatively positive U.S. weekly jobless claims data and Spain’s budget plan also weighed heavily on the safe havens.
Commodity ETF Roundup
With the exception of wheat, soybean, and corn, commodities were higher across the board. Spain’s proposed budget cuts sent investors to their favorite precious metal, pushing gold higher throughout the day. Oil rose for the first time this week, gaining nearly $2 per barrel after three straight days of decline.
ETF Chart Of The Day #1: GDXJ
The Van Eck Market Vectors Junior Gold Miners ETF (GDXJ) was one of the best performers, gaining a whopping 5.31% during the session. Alongside a rally in gold and broad equities, this ETF gapped significantly higher at the open, only to surger higher throughout the day. GDXJ eventually settled just below its high of $25.00 a share [see also GLD-Free Gold Bug ETFdb Portfolio].
ETF Chart Of The Day #2: UCO
The ProShares Ultra DJ-UBS Crude Oil ETF (UCO) had an impressive session today, gaining 4.79% on the day. As crude oil futures rose for the first time this week, this leveraged ETF gapped significantly higher at the open. UCO pushed higher throughout the day, settling just below its high of $31.45 a share [see also Which Commodity ETFs Could Outpace QE3?].
ETF Fun Fact Of The Day
The two best performing funds in the Asia Pacific Equities ETFdb Category so far in 2012 are the MSCI Singapore Index Fund (EWS) and the MSCI New Zealand Investable Market Index Fund (ENZL), which are up 24.68% and 22.51% YTD, respectively.
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Disclosure: No positions at time of writing.
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