To help investors keep up with the markets, we present our ETF Scorecard. The Scorecard takes a step back and looks at how various asset classes across the globe are performing. The weekly performance is from last Friday’s open to this week’s Thursday close.
As vacation season is in full swing, the markets could not be more rattled. An ongoing diplomatic rift between the U.S. and Turkey regarding several matters, including the detention in Turkey of a U.S. evangelical pastor, has contributed to a plunge of the lira against the dollar. As some of Europe’s banks have heavy exposure to the region, the euro suffered a blow. In the U.S., the employment figures for July slightly disappointed, with the economy adding 157,000 jobs compared to a revised 248,000 in the prior month. Pundits had expected 191,000. The unemployment rate dropped to 3.9% from 4% previously, in line with expectations. Average hourly earnings increased by 0.3% month-over-month, compared with a rise of 0.1% in June. Year-over-year, wages are up 2.7% on average, same as in the prior month. U.S. non-manufacturing PMI unexpectedly dropped from 59.1 to 55.7 in July, reaching a one-year low. China’s trade surplus narrowed dramatically in July due to an increase in imports and an ongoing trade war with the U.S. China’s surplus was $28 billion compared to $41 billion in the prior month. Analysts had expected a surplus of $39 billion. Crude oil inventories have whipsawed this summer. For the week ended August 3, stockpiles dropped by 1.4 million barrels, less than analysts had expected. The drop comes after a gain of 3.8 million barrels in the prior week. U.S. unemployment claims came in at 213,000 for the week ended August 4, 6,000 lower compared to the prior week.
Risk Appetite Review
The stock market reversed to gains this week, although they were not uniform as rising geopolitical tensions hit some regions harder than others. The broad market (SPY A) was the best performer for the week with an advance of 0.90%. High Beta (SPHB B-) reported gains of 0.45%, the lowest from the pack.
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Major Index Review
Major indexes were all up. Technology equities (QQQ A-) are again in front of the performance table, edging up 1.17% for the week. Emerging markets (EEM A-), meanwhile, posted the smallest gains, up 0.25%, as a diplomatic spat between Turkey and the U.S. and trade tensions between the U.S. and China weighed on investor sentiment. For the rolling month, Dow Jones (DIA A-) is the best performer with a rise of 2.67%, as it benefited from a string of solid financial results for the second quarter. The small-cap index (IWM B+) was the worst performer for the past 30 days, dropping by 0.93%.
To see how these indices performed a week before last, check out ETF Scorecard: August 3 Edition
Sectors posted mixed performance. Hit by falling oil prices, the energy sector (XLE A) is the worst performer for the week with a drop of 0.87%. (XLE A) is also by far the worst performer for the rolling month with a decline of 3.16%. Consumer discretionary (XLY A) marginally clinched the status of best performer from the telecom sector (XTL A), gaining 1.76%. Both sectors were in recovery mode after suffering from tough environments. Utilities (XLU A) are surprisingly the best performers for the rolling month, up 4.27%.
Foreign Equity Review
Foreign equities were mixed. Russian equities (RSX B+) have finally tumbled after weeks of resilience. The U.S. has imposed a new set of sanctions on Russia, in a surprise move that came shortly after President Donald Trump met with his Russian counterpart Vladimir Putin. Further hitting the Russian stock market, oil prices took a dive this week. (RSX B+) is the worst performer both for the week and the rolling month, down 4.52% and 8.57%, respectively. Chinese stocks (FXI A-) have advanced more than 3% this week, as investors cheered Beijing’s stimulus measures in the face of a trade war with the U.S. Despite dropping this week consistently, the Brazilian stock market (EWZ B+) remains the best performer for the rolling month, up 5.36%.
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Commodities were mixed. Crude oil (USO A) has fallen 3% this week as investors expect demand to take a hit from the trade war between the U.S. and China. (USO A) is also the worst performer for the rolling month with a decline of more than 8%. Natural gas (UNG B-), meanwhile, is the best performer both for the week and the rolling month, up 3.77% and 5.72%, respectively.
Currencies posted mixed results. The U.S. dollar (UUP A) has appreciated 0.44% this week, extending monthly gains to 1.61%. The best performer both for the week and the rolling month, the greenback benefited from a strong domestic economy and relative weakness in other currencies, including the euro and the British pound. The British pound (FXB A-) is the worst performer both for the week and the rolling month, down 1.28% and 3.33%, respectively, as fears of a no-Brexit deal are intensifying.
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Disclosure: No positions at time of writing.