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ETF Scorecard: February 2 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.

The last Federal Reserve’s interest rate decision under the leadership of Janet Yellen took place this week, but her moment was overshadowed by President Donald Trump’s State of the Union address. The Federal Reserve kept interest rates unchanged but sounded out optimism about the U.S. economy, which grew by an annualized pace of 2.3% in 2017. Policymakers left room for a rate hike in March when the new Fed boss, Jerome Powell, will address the public for the first time in his new capacity. The U.S. economy is in its ninth year of expansion and 2018 is expected to be stronger given the boost from the tax cuts, lower dollar and a robust global economy. The Fed noted that the economy is growing at a “solid rate” and the labor market continues to improve, in a strong sign a hike is likely in March. U.S. President Donald Trump gave his first State of the Union speech, praising the tax reform and his “America First” agenda. The main takeaway from his address was the lack of a strong rhetoric on NAFTA and global trade, in a sign he may be more conciliatory in future deals. In addition, Trump said the focus was now turned to infrastructure, calling on Congress to advance a $1.5 trillion plan to fix America’s bridges and roads. U.S. GDP growth slowed to 2.6% in the fourth quarter of 2017 from a revised 3.2% in the previous quarter. However, consumer spending was strong across the board, with the figure brought down by net exports. Analysts had expected the GDP to rise by 2.9%. U.S. durable goods orders advanced 2.6% in December month-over-month, although the rise was largely due to strong vehicle sales, which is typically volatile. Excluding transportation items, orders grew by 0.6%. Germany’s consumer price index dropped 0.7% in January due to the holiday season. Still, the decline was 20 basis points larger than analysts’ expectations. European inflation declined to 1.3% in January, in line with estimates. The fall is the third consecutive one this year. Core inflation, meanwhile, came in at 1%, failing to deliver a surprise. ADP’s employment report indicated a strong job market in the U.S., with the economy adding 234,000 jobs in the first month of the year. Pundits had forecasted 195,000 jobs. Crude oil inventories have finally turned a page, rising for the first time in more than two months. Crude stocks were up 6.8 million barrels in the week ended January 26, significantly above expectations of 0.1 million barrels. U.S. unemployment claims came in at 230,000 for the week ended January 27, beating consensus estimates of 235,000. In the prior week, claims also stood at depressed levels of 233,000.

Risk Appetite Review

Markets have finally made a correction, with all indexes down this week. Equal Weight (RSP B+) posted the weakest performance from the pack, declining 1.41%. Low Volatility (SPLV A) recorded the smallest loss, down 0.70%. The S&P 500 (SPY A), or the broad market, dropped by nearly 1%, in what was the first weekly decline in months.

 

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Major Index Review

Global markets were all down. Emerging markets (EEM A-) were hit the most, tumbling 2.69%. (EEM A-) recorded gains in the weeks leading up to the pullback. The technology ETF (QQQ A-) was the best performer with a decline of just 0.77%, as a broad market retreat was made less painful by strong results posted by tech darlings such as Netflix (NFLX) and Facebook. (QQQ A-) remains the best performer for the rolling month, gaining as much as 7.3%. Small-cap stocks (IWM B+), meanwhile, were the worst performers for the month, posting an advance of 2.38%.

 

To see how these indices performed a week before last, check out ETF Scorecard: January 26 Edition.

Sectors Review

Embattled telecom stocks (XTL A), long unfavored by investors, were the only gainers this week, with an advance of a mere 0.21%. Materials (XLB A) suffered the most from the broad pullback in equities, dropping 2.76% this week. Buoyed by strong holiday sales and strong Netflix performance, consumer discretionary stocks (XLY A) were the best monthly performers with a gain of 7.57%. Utilities (XLU A) have not benefited from the volatility in the equity markets and tumbled 4.61% for the rolling month.

 

Foreign Equity Review

Foreign equities were all down, with the exception of Brazil. The Brazilian ETF (EWZ B+) was the best performer both for the week and the rolling month, up 0.39% and 12.71%, respectively, despite political shocks at home. The country’s economy is expected to benefit from a strong global economy. The Chinese stock market (FXI A-) was the worst performer for the week, dropping as much as 3.32%, retreating after an intense and continued rally in previous months. India (EPI B+) is again the worst monthly performer with an advance of just 1.47%.

 

To find out more about ETFs exposed to particular countries, check 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 rather mixed. Agricultural commodities (DBA A) is rarely the top performer, but in a week of corrections across the board it managed to deliver the surprise. (DBA A) is up 1.39% in the past five days. Natural gas (UNG B-) pulled back previous week’s gains, dropping nearly 9% in the five days through Thursday. Oil (USO A) is the best monthly performer thanks to steady gains recorded in previous weeks as U.S. stockpiles have dropped incessantly. (USO A) is up a staggering 9.69% for the past 30 days. Copper (JJC A) is the only faller for the rolling month, registering a fall of nearly 2%.

 

Use our Head-to-Head Comparison tool to compare two ETFs such as (USO A) and (DBA A) on a variety of criteria such as performance, AUM, trading volume and expenses.

Currency Review

Despite a global market correction, the U.S. dollar (UUP A) continued to underperform both for the week and the rolling month, dropping 0.60% and 3.34%, respectively. Eurozone’s shared currency (FXE A), meanwhile, is the best performer for the week, up 0.73%, as investors increased bets on an outperforming European economy.

 

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