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 was very eventful with three developed world central banks providing updates on their monetary policies. Bank of Canada increased interest rates for the first time in seven years to 0.75%, but the watchdog noted there is no predetermined path to hiking rates further. The bank cited the economy’s strength and confidence that the remaining economic slack will be absorbed by the end of the year. The European Central Bank, meanwhile, left its key interest rate unchanged at record low levels and kept the monetary stimulus in place, saying the euro area economy is still too weak to remove stimulus measures. Mario Draghi, the ECB president, said there were signs the euro area economy is becoming stronger, with only wages and prices remaining to tick up for a full-blown recovery to take place. He warned, however, that inflation is still expected to remain under the 2% level until 2019. Bank of Japan also kept monetary stimulus unchanged, as it cut inflation expectations to 1.1% in the current fiscal year from 1.4% previously. In the U.S., Republicans have again failed to repeal the Affordable Care Act, or Obamacare, after two Republican senators declared they would oppose such a bill. Dissidents Mike Lee of Utah and Jerry Moran of Kansas said that the bill fails to repeal Obamacare and does not address healthcare’s rising premium costs. Democrats have now called upon Republicans to launch a bipartisan effort to work on a bill that would have broad support. The U.S., Canada and Mexico have agreed to start the process for re-negotiating the NAFTA agreement, according to people familiar with the matter cited by Reuters. The officials representing the three countries will hold seven rounds of talks at three-week intervals in the hope of reaching a new agreement by the beginning of next year. The negotiations are expected to start in mid-August. U.S. consumer price index was flat in June compared to the previous month, while year-over-year CPI of 1.6% is below the Federal Reserve’s target of 2%. The downbeat report raised further worries that the U.S. economy is slowing down. CPI, excluding food and energy, was up 1.7% year-over-year and 0.1% compared to May. U.S. retail sales also disappointed, falling 0.2% in June compared to the prior month. China’s GDP rose 6.9% in the second quarter, beating estimates of 6.8%. The Chinese economy rose 6.9% in the previous quarter. Meanwhile, Chinese industrial production growth of 7.6% comfortably beat estimates of 6.5%. Britain’s central bank finally got a piece of good news, with the consumer price index falling to 2.6% in June from 2.9% previously. Crude oil inventories fell by 4.7 million barrels in the July 14 week, the sixth consecutive weekly drop. In the previous week, the decline was more dramatic, by 7.6 million barrels. The U.S. job market continued to be strong this week, with unemployment claims coming in at 233,000 for the week ended July 15, better than consensus estimates of 246,000. To keep track of all the latest market news and analysis, visit ETFdb’s News section.
Risk Appetite Review
The broad market (SPY A) has had another good run this week, advancing 1.33%, despite signals that the developed world central banks are withdrawing their stimulus measures. Risk appetite has been strong over the past week, with High Beta (SPHB B-) gaining 2.45%, the best performance. Low Volatility (SPLV A) was rather shunned by investors, tepidly rising 0.45%. Sign up for ETFdb.com Pro and get access to real-time ratings on over 1,900 U.S.-listed ETFs.
Major Index Review
Global equities were in rally mode. The technology index (QQQ A-) was the best performer this week, jumping 1.84%. Technology companies have been buoyed by rising corporate profits and an improving global economy. Dow Jones (DIA A-) unsurprisingly gained the least this week, just 0.41%, as investors ignored less risky assets. Dow Jones, which is sometimes acting as a safe haven given that it mostly contains blue-chips, is also the worst monthly performer with a rise of just 0.60%. Emerging markets (EEM A-) has been the best performer for the rolling month, helped by, among other things, a falling U.S. dollar. (EEM A-) is up 5.66% over the past 30 days. To see how these indices performed last week, check out ETF Scorecard: July 14 Edition.
The telecom sector (XTL A) has advanced 2.12% this past week, representing the best performance from the pack. For the rolling month, however, the healthcare sector (XLV A) has been king, with a rise of 3.30%. (XLV A) is continuing its rally after it became clear President Trump will have an easier stance on the sector than promised on the campaign trail. The only faller this week is the industrial sector (XLI A), down 0.48%. Consumer staples (XLP A) are the worst monthly performers with a drop of 2.27%.
Foreign Equity Review
Foreign equities were all up. Brazil (EWZ B+) posted the strongest gains this week, jumping 1.58%. The nation’s equities have been recovering of late thanks to the passing of a labor reform that will make it harder for unions to launch legal actions in labor disputes. With a staggering gain of 10.67% over the past 30 days, (EWZ B+) is also the best performer for the rolling month. India (EPI B+) staged small gains of 0.35% this week, becoming the worst performer. For the rolling month, however, Japanese equities (EWJ A) are up 0.37%, representing the smallest gain from the bunch. 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 posted solid gains. Natural gas (UNG B-) was the best performer this week, surging 2.72%. Supplies of natural gas advanced by 28 billion cubic feet for the week ended July 14, broadly in line with estimates. Although oil (USO A) posted gains of 0.84%, that was the worst performance this week. For the rolling month, however, oil is up 7.7%, largely thanks to quickly declining stockpiles in the U.S. Silver (SLV C+), down 0.96% for the rolling month, is the worst performer, as investors avoided safe-haven assets. Use our Head-to-Head Comparison tool to compare two ETFs such as (UNG B-) and (SLV C+) on a variety of criteria such as performance, AUM, trading volume and expenses.
Currencies were mixed. The U.S. dollar (UUP A) has dropped 1.09% over the past week, due to fears about the ongoing drama in Washington surrounding the probe into Russian meddling in the U.S. elections. The greenback is also the worst performer for the rolling month, down 3.29%. The Australian dollar (FXA A-) is the best performer both for the week and the rolling month, up 1.87% and 4.72%, respectively. The nation’s currency benefited from bets that the central bank will follow in the footsteps of the U.S. and Canada and increase interest rates, although a top official squashed such speculation.
For more ETF analysis, make sure to sign up for our free ETF newsletter.
Disclosure: No positions at time of writing.