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Top ETF Stories of April 2017

Sanghamitra Saha

The Wall Street saw sell-offs to start April, but the month did not fool investors eventually. The S&P 500-based fund SPY, the Dow Jones Industrial Average-based ETF DIA and the Nasdaq 100 based ETF QQQ gained about 1.1%, 1.4% and 2.7%, respectively in the last one month (as of April 28, 2017).

Disappointing auto sales, job data and uncertainty over the materialization of Trump’s pro-growth promises after his failure to pull off the Health Care bill due to want of support weighed on the broader market in the beginning of the month (read: 4 Sector ETFs Defying 10-Month Low Job Gains in March).

If this was not enough, the Fed’s policy tightening concerns and geopolitical concerns had a lingering downbeat impact on the market, which was more than offset by some stellar earnings reports. Let’s see what the other key financial events of the month were that moved the ETF world.

Trump’s Tax Plan

As promised, President Trump’s administration announced a tax plan in late April that mainly revolved around cutting corporate taxes and adjusting personal tax rates.  However, the document did not reveal much details and did not disclose the plan’s effect on budget deficit.

Though most market participants are not sure if Congress will pass any of these tax proposals, the Trump administration seems confident about the materialization of the tax plan. The administration sees the completion of “the biggest overhaul of the tax code since President Ronald Reagan by the end of the year”, as per Treasury Secretary Steven Mnuchin.

If all goes well, buyback ETF like PowerShares Buyback Achievers Portfolio PKW, Dividend Growth ETF like iShares Core Dividend Growth ETF DGRO, small-cap growth ETF like iSharesRussell 2000 Growth ETFIWO should benefit. However, none of the funds has shown any meaningful movement yet due to the haunting uncertainty over the materialization of the plans (read: 5 ETFs to Buy if Trump Tax Reform is Enacted by Year End).

Snap Election in U.K. Called For

British Prime Minister Theresa May made a surprise announcement in mid-April to hold a snap general election on June 8, three years ahead of the 2020 schedule. Interference from opposition to pursue Brexit negotiations was behind this decision. With this election, May seeks to increase her party’s majority in the parliament.

Overall, CurrencyShares British Pound Sterling ETF FXB gained about 3.3% while iShares MSCI United Kingdom EWU added about 1.7% in the last one month (as of April 28, 2017) (read: Is the Bearish Run Over for British Pound ETFs?).

French Election Soothes Investors’ Sentiment

The global stock market greeted the outcome of the first round of France’s presidential election held on April 23wherein the centrist candidate Emmanuel Macron won with nearly 24% votes.Agreed, about 21.4% polls have gone to the far-right candidate Marine Le Pen’s kitty, leading to an impending runoff election between them on May 7.

In late April, polls put Macron’s chances of winning ahead of Le Pen by 62% to 38%, as many political camps may now choose to be with ''anyone but Le Pen camp'', if we go by the source. The broader market has heaved a sigh of relief on higher chances of market-friendly candidate Macron’s wining. iShares MSCI France ETF EWQ, iShares MSCI Europe Financials ETF EUFN and SPDR EURO STOXX 50 ETF FEZ) added about 5.7%, 4.7% and 4.1% , respectively in the last one month (read: 5 European ETFs Soaring on French Election Results).

Nasdaq Crosses 6,000

Thanks to the improving technology sector, the tech heavy Nasdaq Composite Index inched past the huge milestone of 6,000 for the first time in in late April. As a result, Nasdaq-oriented ETFs like PowerShares QQQ QQQ, First Trust NASDAQ-100 Equal Weighted Index Fund QQEW and Fidelity Nasdaq Composite Index Tracking Stock ONEQ added 2.7%, 1.7% and 2.2%, respectively in the month (read: 5 Must-Watch ETFs as Nasdaq Hits 6,000).

U.S. GDP Data came in Low

The U.S. economy grew at the weakest clip in three years hurt by struggling auto sales and muted home-heating bills, which set aside an uptick in investment by housing and oil drilling, as per Bloomberg.

GDP advanced at a 0.7% annualized rate in Q1 of 2017, coming in lower than the estimated 1% rise and thae prior quarter’s gain of 2.1%. Consumer spending delivered the weakest show since 2009. Both SPY and DIA were down following the release of the data at the end of the month.

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SPDR-DJ IND AVG (DIA): ETF Research Reports
 
NASDAQ-100 SHRS (QQQ): ETF Research Reports
 
SPDR-SP 500 TR (SPY): ETF Research Reports
 
CRYSHS-BRI PD S (FXB): ETF Research Reports
 
ISHARS-RS 2K GR (IWO): ETF Research Reports
 
ISHARS-FRANCE (EWQ): ETF Research Reports
 
ISHARS-MS EU FN (EUFN): ETF Research Reports
 
ISHRS-CORE DG (DGRO): ETF Research Reports
 
FIDLTY NDQ CMP (ONEQ): ETF Research Reports
 
ISHARS-UTD KING (EWU): ETF Research Reports
 
PWRSH-BYBK ACHV (PKW): ETF Research Reports
 
FIRST N-100 EQW (QQEW): ETF Research Reports
 
SPDR-EU STX 50 (FEZ): ETF Research Reports
 
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