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ETF Trading Report: Nat Gas, Africa ETFs in Focus

Eric Dutram

Markets again saw light volume levels as investors focused in on Hurricane Isaac and patiently await any reports from Ben Bernanke at Jackson Hole later in the week. Thanks to this, markets oscillated around breakeven for much of the day, as the Dow lost about 0.2%, the S&P 500 fell by 0.1% and the Nasdaq was the lone winner adding 0.1% on the day.

From a sector perspective, big banks and some of the larger tech names were losers during today’s session, while energy names, staples, and consumer stocks led the way in Tuesday trading. Of individual names, HPQ lost about 1.8%, while Carnival Corp (CCL) was one of the biggest winners, adding 3% on the day (read Singapore ETFs for the Rise of Asia).

This flat trading was continued by more light volume in the forex market as well, as the dollar lost slightly against many of the world’s top currencies. Still, the U.S. 10 year note lost a bit more in yield, falling to 1.64%, while a similar trend was seen in the German and British government bond markets as well.

For the most part, commodities held their breath during Tuesday trading as investors waited to see the damage caused by Isaac in the Gulf and also the rain that the storm drops across the drought-stricken plain states. Beyond this trend, investors also say a 2.9% increase in sugar prices, and a 3.8% move higher in the American cocoa market, pushing these two to the top of the charts on the day (read Will There Be a WTO Boost for Russia ETFs?).

Meanwhile, relative ETF volume was yet again light as SPY and GLD both traded about half as much as normal on the day. Major emerging market funds, dollar and bond products also saw similarly light days as we get into the true dog days of August before volume hopefully picks back up next week.

Still, investors saw a solid amount of interest in the United States 12 Month Natural Gas Fund (UNL) as the product traded roughly five times more than normal on the day. Clearly, the interest came thanks to Isaac and the prospect of the storm knocking out valuable supplies to the region, although it should be noted that UNG didn’t see a similarly large amount of trading on the day (read the Comprehensive Guide to Natural Gas ETFs).

Instead, it appears as though investors focused in on UNL and its more diversified holdings profile which allocates assets across 12 different maturities. This focus helped to push UNL down over 2.1% on the day, far more than the 1.5% loss that UNG suffered. Possibly this suggests that investors are looking for supplies to be less effected even just six weeks out, implying that traders aren’t buying into long term damage for natural gas infrastructure.

Another fund that saw a solid amount of trading in the light session was the iShares MSCI South Africa Index Fund (EZA). The product does about 238,000 shares in volume on a normal day but saw more than 600,000 shares change hands in Tuesday trading (read Time to Exit the South Africa ETF?).

Mining troubles are continuing in the nation, while there are also worries that wheat crops may come in less than expected in the large country. Thanks to these worries and some hesitation over the long-term health in the basic materials market, investors may be getting more concerned over investing in the country, as evidenced by today’s loss and the recent short-term decline in EZA.

(see more in the Zacks ETF Center)

Read the analyst report on UNL

Read the analyst report on EZA

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