Wednesday was a wild day for U.S. and global equity markets, with huge losses for most major benchmarks that conjured up images of late 2008, when seemingly every day saw a triple digit swing in the Dow. The ETFdb 60 Index, a benchmark that measures the performance of the universe of investable assets available through ETFs, dropped 18.92 (1.9%) to close at 980.50. Only ten of the benchmark’s components were up, and 30 ETFs lost more than 2% for the session. Aggregate trading volume of over 1.1 billion shares represents the busiest day of the month.
The decliners were led by the iShares MSCI Brazil Index Fund (EWZ), which lost 6.4% as worries about weakening prospects for a sustained global recovery led investors to pull assets out of emerging markets. Brazil has seen a huge run-up in equity markets this year, with EWZ still up more than 90% year-to-date even after Wednesday’s losses. Brazilian equities also suffered as concerns continued to linger about the impact of a foreign investment tax. The Market Vectors Brazil Small Cap ETF (BRF) finished the session down more than 7%, as no part of the economy was spared. Brazil’s rough day also weighed on emerging markets ETFs: the iShares MSCI Emerging Markets Index Fund (EEM) lost 4.6%.
Continuing recent trends, the volatility ETNs offered by iPath rose sharply as uncertainty slammed nearly every asset class. The iPath S&P 500 VIX Short Term Futures ETN (VXX) rose 6.9% as expectations for volatility in coming months skyrocketed. The mid term futures ETN (VXZ) posted a much smaller gain of only 1.1%, perhaps an indication that volatility isn’t expected to hold up. VXX has gained nearly 10% over the last week as investors have started to seek out effective hedges against a double dip.
Disclosure: No positions at time of writing.