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ETF Scorecard: December 15 Edition

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.

This week, a host of important central banks have made their last update of the year on monetary policies, and all of them sounded cautiously optimistic. The U.S. Federal Reserve was the first to kick off the marathon of meetings on Wednesday, raising its benchmark interest rate by 0.25% to 1.50%, in a widely expected move. The Fed sounded optimistic about the economy, mentioning the strength of the stock market as a result of the potential corporate tax cuts. Fed Chair Janet Yellen poured cold water on Trump’s promise that the U.S. economy will grow by 4%, but said 2.5% was realistic next year. The Fed expects a slowdown in 2020 to 2%. The European Central Bank kept interest rates and stimulus measures unchanged, but President Mario Draghi sounded upbeat about the economy. He was also cautious not to send the wrong signals, saying the stimulus measures will be withdrawn slowly so as not to derail an impressive recovery. At the same time, he said the bank was ready to keep stimulus in place for as long as necessary to bring back inflation to the 2% target. The Bank of England also kept interest rates unchanged at 0.5% and said it was optimistic that progress in Brexit negotiations would provide a boost to the economy. Days ahead of the Fed meeting, the U.S. delivered another strong jobs report, suggesting the labor market is on strong footing. The U.S. economy added 228,000 jobs in November, comfortably beating estimates of 190,000. The impressive figure comes after the U.S. economy added 268,000 jobs in October. Average hourly earnings disappointed analysts, rising by just 0.2% in November, while the unemployment rate stood still at 4.1%. Consumer prices in Britain remain at elevated levels, edging up by 3.1% in November compared to the same period last year. Analysts had expected inflation to remain flat at 3%. U.S. consumer prices failed to surprise the markets, rising by 0.4% in November, month-over-month. Compared to the same period last year, inflation is up 2.2% in the U.S., slightly above the Federal Reserve’s target of 2%. Core CPI stood at 1.7%, year-over-year. The divergence between the build-up in gasoline and crude stockpiles continued in the December 8 week. Crude inventories fell by 5.1 million barrels, while gasoline stocks advanced by 5.7 million barrels.

Risk Appetite Review

The markets dropped this week. The broad market (SPY A) was the best performer with a small advance of 0.06%. In a sign investors shunned riskier assets, High Beta (SPHB B-) dropped the most – by 1.10%.  

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Major Index Review

Dow Jones (DIA A-) has been on a tear lately, posting the best performance again this week, as investors are excited about strong global growth. (DIA A-) has risen nearly 1% since last Thursday, extending monthly gains to 5%, the highest from the pack. The small-cap index (IWM B+) is the only faller this week, down 1.34%, largely due to a stunning loss registered by U.S. Republicans in Alabama. The loss represents a blow to President Donald Trump, as his policies become less and less popular. As a result, the tax overhaul could be endangered. Emerging markets index (EEM A-) remains the worst performer for the rolling month with a small drop of 0.09%. (EEM A-) has declined 0.09% over the past 30 days, largely due to a poorly performing Chinese stock market.  

To see how these indices performed last week, check out ETF Scorecard: December 8 Edition.

Sectors Review

Clearly, the Republican loss in Alabama delivered a hit to financial stocks, with (XLF A) recording a fall of more than 1%. However, gains in the previous weeks on the back of potential tax cuts made the sector the best-performing for the rolling month, up 6.42%. The telecom sector (XTL A) and healthcare sector (XLV A) both posted impressive performances this week, rising 0.96% and 0.97%, respectively. The real estate industry (XLRE ) posted the worst losses for the rolling month, down 1.30%.  

Foreign Equity Review

Brazil equities (EWZ B+) declined by nearly 2% this week, as a vote on pension reforms was delayed until February. A bill to cut pension and social benefits in Brazil is the cornerstone of President Michel Temer’s fiscal reform efforts, which cheered the market. Russia (RSX B+) is the best performer for the week, rising 2%. For the rolling month, China remains the worst performer with a fall of 1.37%. The Chinese stock market rose 1.05% this week, erasing some losses recorded in previous weeks. Britain (EWU A-) is the best performer for the rolling month with a rise of 3.18%. The nation’s equities rallied after Prime Minister Theresa May struck an accord with the European Union to move Brexit negotiations forward, although she was dealt a blow this week by internal discord in her own party. To find out more about ETFs exposed to particular countries, use our ETF Country Exposure tool. Select a particular country from a world map and get a list of all ETFs tracking your pick.  

Commodities Review

Commodities were mixed. Copper (JJC A) was the best performer this week, surging 3.85% on strong economic data from China, which is by far the world’s largest consumer. Natural gas (UNG B-) is again the worst weekly performer, this time tumbling 4%. For the rolling month, (UNG B-) remains down 15.51%. The commodity has suffered from forecasts of mild temperatures across the U.S., with the Energy Information Administration reporting an underwhelming decrease in stocks for the December 8 week compared to the same period last year. Oil (USO A) is the only gainer for the rolling month, up 0.70%. Use our Head-to-Head Comparison tool to compare two ETFs such as (USO A) and (UNG B-) on a variety of criteria such as performance, AUM, trading volume and expenses.  

Currency Review

The Australian dollar (FXA A-) jumped by 2% since last Thursday, after weeks of losses. The impressive performance was thanks to upbeat economic data in China. The British pound (FXB A-) is the best monthly performer with an advance of 2.49%, as investors cheered the progress made in Brexit negotiations. The U.S. dollar (UUP A) is the worst performer both for the week and the rolling month, dropping 0.37% and 0.49%, respectively.  

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