A ‘Santa Claus rally’ continued on Wall Street in Tuesday trading as most major equity indexes posted modest gains on the day. The Dow jumped 55 points while the Nasdaq and S&P 500 posted gains of 0.7% and 0.6%, respectively. Commodity markets, with the exception of the two majors– gold and oil– posted decent gains on the day, led once again by softs such as coffee and cotton as well as the red metal, copper.
Today’s market moving events came from deal activity in the financial sector and solid earnings reports from the technology sector. Canada’s Toronto-Dominion Bank agreed to buy Chrysler Financial for $6.3 billion helping to spur speculation that a wave of M&A activity would be on the horizon, driven by relatively strong Canadian financial firms. “Unencumbered by toxic assets, the larger and stronger Canadian banks are in a prime position to scoop up U.S. financial firms in need of rescue” said Anthony Michael Sabino, professor of law and business at St. John’s University in New York. Meanwhile, tech investors cheered the results of software firm Adobe and fellow tech firm Jabil Circuit which helped to boost the broad technology sector in Tuesday trading, leaving a bullish mood on the street heading into Wednesday’s session.
One of the biggest ETF winners on the day was the iShares FTSE China 25 Index Fund (FXI) which gained 2.1% in Tuesday trading. Today’s gains in the Chinese market came after government officials in the world’s most populous nation soothed investors’ fears over the European debt crisis, potentially creating greater stability and fostering better relations between the two giants. Chinese Vice Premier Wang Qishan said that the country has taken ‘concrete action‘ to help stabilize the euro and calm the markets. This news helped to boost a number of companies in FXI which tend to be more global than some of the other ETFs in the China Equities ETFdb Category, suggesting that they are more likely to be impacted by these outside factors than small cap China companies [see holdings of FXI here].
One of the biggest losers in the ETFdb 60 was the United States Natural Gas Fund (UNG) which reversed its recent surge to end the day down 3.6%. In a huge reversal from the recent uptick in the last few days, natural gas prices tumbled as new weather forecasts suggested a moderating demand for the popular heating fuel in the weeks ahead. “It’s a simple function of people reacting to the weather and thin trading ahead of the holidays,” said Mike Rose, the director of energy trading for Angus Jackson Inc. in Fort Lauderdale, Florida. “The market’s just going to sit around the $4.20 area, give or take 20 cents.” This move helped to push the popular trading tool down 7.6% over the past week and down 44.5% so far in 2010 [see fundamentals of UNG here].
Disclosure: no positions at time of writing.