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.
In the midterm elections, Democrats regained control of the House of Representatives after eight years, giving them more power to keep President Donald Trump in check, while the Senate was won by Republicans. With the Democrats controlling the House, Trump will have a more difficult time implementing his agenda, which includes an additional batch of tax cuts and repealing and replacing the Affordable Care Act. In addition, Democrats may order the publishing of the president’s tax returns and protect the ongoing investigation into the alleged collusion between the Trump administration and the Russian government. The U.S. Federal Reserve kept interest rates unchanged at 2.25%, but strongly signaled that another rate hike will come next month and predicted many more next year. The officials are happy with the current environment, despite recent turbulence in the stock market. Germany is at a crossroads. Long-time Chancellor Angela Merkel will step down as head of the center-right Christian Democratic Union (CDU), but will remain in the top government post until 2021. A recent poll revealed that around two-thirds of Germans believe she must leave as chancellor. In the U.S., the Bureau of Labor Statistics reported another blowout jobs report. The economy added as many as 250,000 jobs in October, beating expectations of 194,000. The numbers for the prior month were revised down to 118,000. The unemployment rate stood flat at 3.7%. Meanwhile, average hourly earnings rose by 0.2% month-over-month to $27.30 per hour. Earnings are up 3.1% compared to the same period last year. U.S. non-manufacturing purchasing managers’ index (PMI) fell from 61.6 to 60.3 in November but beat expectations of 59.3. The index is still hovering near 12-year highs, further proof of a strong U.S. economy. Unemployment claims continued to head lower. For the week ended November 3, there were 214,000 initial claims registered, 1,000 less than in the prior week. Crude oil inventories rose for the seventh consecutive week. Stockpiles advanced by 5.8 million barrels for the week ended November 2 compared with forecasts of 2 million.
Risk Appetite Review
Markets were on a tear this week, continuing the uptrend after a few weeks of steady declines. The broad market (SPY A) rose more than 2% for the past five days, claiming the second-best performer spot. Meanwhile, low volatility (SPLV A) was surprisingly the best performer, despite what appears to be a return of the risk appetite. (SPLV A) is up 2.5% for the week ended Thursday. Up 1.56%, risk assets (SPHB B-) posted the smallest gains after surging more than 6% last week.
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Major Index Review
Dow Jones (DIA A-) is the best weekly performer with a rise of 2.63%, as a strong earnings season boosted key constituents. Emerging markets (EEM A-) fell 1.7%, the only loser from the pack, but remains the best performer for the rolling month, down slightly. Small-cap stocks (IWM B+) dropped nearly 3% for the rolling month, despite posting a rise of 1.9% for the past five days.
To see how these indices performed a week before last, check out ETF Scorecard: November 2 Edition.
The retail sector (XLY A) was the best weekly performer, edging up 2.83%. Dragged by falling oil prices, the energy sector (XLE A) rose just 0.20% for the week, representing the worst performance. For the rolling month, (XLE A) fell 11.31%, by far the biggest loser. Consumer staples (XLP A) retained the crown of the best monthly performer, rising as much as 4.23%. However, the gains were not enough to bring (XLP A) into positive territory this year. The sector has been beaten up amid changes in consumer tastes.
Foreign Equity Review
After weeks of strong gains, Brazil’s stock market has finally posted losses – and quite big at that. Brazil (EWZ B+) dropped nearly 6% for the past week, by far the worst performer. Meanwhile, the Japanese stock market (EWJ A) started to reverse losses and advanced 0.5% for the week. Still, Japanese equities remain the worst monthly performers with a loss of 5.1%. Indian equities (EPI B+) were flat for the week but are up more than 6% for the rolling month.
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Commodities were all down with one exception. Oil (USO A) continued to slide, becoming the worst performer both for the week and the rolling month. (USO A) declined 4.32% for the five days through Thursday, extending monthly losses to 18.6%. Natural gas (UNG B-), meanwhile, offset the energy sector’s overall poor performance, advancing 11.8% for the week and 6.6% for the rolling month. (UNG B-) is the best performer for both periods.
The European shared currency (FXE A) continued to lose ground against its peers, as potential political upheaval in Germany and worries about Italy’s budget plan weighed on sentiment. (FXE A) declined 1.93% this week and is down 0.90% for the rolling month, the worst performance from the pack. Meanwhile, the Australian dollar (FXA A-) is the best performer from the bunch, increasing 0.53% and 2.66% for the week and the rolling month, respectively.
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Disclosure: No positions at time of writing.