Equity markets pulled back sharply on Thursday, halting a six day winning streak for the Dow, as Wal-Mart predicted a tough holiday season for retailers and the Federal Housing Administration announced that its cash reserves had dropped well below the congressionally-mandated level. The ETFdb 60 Index, a benchmark of the universe of investable assets available through ETFs, dropped 10.32 points, or 1.0%, to close at 1,007.80.
The iShares MSCI Brazil Index Fund (EWZ) lost more than 3% for the session, as the dollar strengthened almost 1% relative to the real and commodity prices dropped. Increases in U.S. crude oil inventories weighed on Petrobras, a major component of EWZ. The growing importance of China and Brazil was highlighted by MSCI’s decision to increase weightings to these countries. MSCI will add 11 Brazilian companies to its emerging markets index at the end of the month, a move that should boost demand for these stocks. Seven securities issued by Chinese companies will be added as well.
Emerging markets ETFs were also down sharply for the day, with the iShares MSCI Emerging Markets Index Fund (EEM) shedding 2.2%.ETFdb Pro members can read more about the prospects for emerging markets ETFs in our ETFdb Category Report (if you’re not a Pro member yet, sign up for a free trial or read more here).
The PowerShares DB USD Index Bullish Fund (UUP) jumped on Thursday as the dollar halted its recent downturn and reclaimed territory against rival currencies. UUP is based on an index that takes a long position in USDX futures contracts, offering exposure to the U.S. dollar relative to a basket of developed market currencies. Near zero interest rates and concerns about its future as a reserve currency have weighed on the dollar in recent months, and UUP has lost almost 8% for the year.
Disclosure: No positions at time of writing.