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ETF Trading Report: Euro, Singapore ETFs In Focus

Eric Dutram

Although markets struggled in the first hour of trading after weakness was seen in the Spanish bond market, stocks soon recovered, finishing the day strongly in the green. The S&P 500 added 1.2% on the day while the Nasdaq gained a similar figure and the Dow jumped by 1.3%.

There was impressive strength in the financial sector on the day, led by big gains in BAC, JPM, and C. Meanwhile, basic materials and industrials also surged, while most names in tech and utilities were weak on the day (Read Emerging Market Small Cap ETFs: Freefall Continues).

For currency trading, the dollar had a rocky session thanks to extreme volatility against the euro, but ended the day down a tad in terms of the U.S. dollar index. Thanks in part to this dollar weakness and the broad risk-on trade, the 10 year added about 0.08%, jumping to a yield of 1.67% to close out the session.

Although investors moved to equities, they did not embrace commodities on the session as most energy and soft commodities were in the red for Tuesday. Investors did see some strength in the metals market, as copper was up about eight cents while gold and silver each added more than 1% as well.

In ETF trading, volume was pretty much on par for Tuesday’s session, as most products were in line from this look. Investors did, however, continue to see decent activity in the commodity and consumer discretionary space, while the style box and commodity sector ETFs traded less than normal.

In particular, investors saw outsized volume in the iShares MSCI Singapore Index Fund (EWS). The product usually sees robust volume of about 1.8 million shares but spiked to 7.1 million shares during Tuesday trading (see Time To Buy The Singapore ETFs).

This is somewhat surprising given that many other Asia-Pacific ETFs traded on light volume, especially others in the developed market sphere in the region. Additionally, EWS has a heavy exposure to financials which could see higher levels of volatility given the market environment.

However, their financials tend to be less exposed to the European crisis so it is possible that some traders looked to gain access to the space and a solid developed market by playing this Asian nation via EWS at this time.

Another ETF that saw a big day of volume was the Market Vectors Double Short Euro ETN (DRR). The product usually sees volume of about 26,000 shares but saw a spike to 83,000 shares during today’s session (see Did The Spanish Bailout Help European ETFs?).

Interestingly, this heavy volume came despite weak levels of activity in a number of other currency products including those tracking the euro on an unleveraged basis. Clearly, there was some interest in getting short the common currency ahead of what looks to be a volatile end of the week in Europe.

(see more on ETFs at the Zacks ETF Center)

Read the analyst report on DRR

Read the analyst report on EWS

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