After monitoring European markets for much of the last two weeks, investors returned their focus stateside to kick off another week, digesting a wave of data reports providing a glimpse into the health of the U.S. economy. News that China is increasing its Treasury holdings was a welcome development, as was GM’s report of $865 million in first quarter earnings (see Who Else Wants An Automotive ETF?). Elsewhere, BP reported some success in its efforts to contain the oil spill in the Gulf of Mexico, as crude oil prices continued to plummet.
The ETFdb 60 Index, a benchmark measuring the performance of asset classes available through ETFs, dropped 1.9 points, or 0.2%, to close at 1,032.24. Winners and losers were roughly even on the day, as volume once again exceeded one billion shares.
The biggest loser in the ETFdb 60 Index was the iPath Dow Jones-UBS Copper Index ETN (JJC), which sank 5.3% on the day. Despite relatively stable equity markets, copper prices plummeted to start the week following a series of discouraging data releases. The Federal Reserve Bank of New York released a report showing that manufacturing in the New York region expanded at a slower pace in May than had been forecast, sending copper futures sharply lower in afternoon trading. A stronger dollar also weighed on copper prices on Monday, as the euro continued its slide against the greenback (see Three ETFs For Euro/Dollar Parity).
One of the biggest gainers in the ETFdb 60 was the United States Natural Gas Fund (UNG), which climbed 1.6% on the day. Natural gas futures rose for the third time in four days as expectations for warm weather throughout the country will increase demand from gas-fired power plants. As temperatures rise, increased use of air conditioning translates into higher demand for electricity, which in turn can boost power plants’ need for natural gas.
Several other factors helped to boost natural gas prices. Figures from the Federal Reserve released late last week showed that industrial production in the U.S. increased by 0.8% in April, the biggest jump in three months. Separately, data maintained by Baker Hughes indicated that the number of rigs drilling for natural gas fell for the third time in four weeks; that raised hopes that drilling activity has peaked and may begin pulling back in coming months, thereby reducing some of the supply in the market.
Disclosure: No positions at time of writing.