Wall Street’s brutal losing streak came to an end on Thursday, as concerns over the euro zone’s woes eased and global equity markets surged. Investors cheered remarks from Beijing indicating that China doesn’t plan to sell its European bond holdings, a scenario that could have flooded the market. Meanwhile in Spain, the government approved new budget cuts, a step seen as necessary if the cash-strapped country is to avoid the issues currently plaguing Greece. An extension of a drilling moratorium did little to dampen investor optimism, as energy stocks soared on a weaker dollar and a jump in crude prices.
The ETFdb 60 Index, a benchmark measuring the performance of asset classes available through exchange-traded products, climbed 23.01 points, or 2.3%, to close at 1,017.64. Trading was once again heavy, with aggregate volume exceeding one billion shares.
Among the biggest gainers of the day was the Vanguard European ETF (VGK), which climbed 6.6% on the day as bargain hunters picked up beaten down European stocks. Spain and Italy, two economies battered over the last month as fears of a debt crisis intensified, led the way higher on Thursday; EWP added 7.3% while EWI gained 8.4%. Spanish Prime Minister José Luis Rodríguez Zapatero secured approval for his plans to cut an additional €15 billion in public spending in Spain by the narrowest of margins; the parliamentary vote passed 169-168, highlighting the divide over how to address the country’s deteriorating economic condition. The measures approved on Thursday would reduce the deficit by an additional 1.5 percentage points of GDP over the next two years.
Another big winner was the iShares MSCI Brazil Index Fund (EWZ), which added 6.1% on the day. EWZ had slumped in recent weeks as a strengthening dollar weighed on commodity prices and investors fled risky assets. With significant allocations to the industrial materials and energy sectors, EWZ got a nice boost from a spike in crude prices and other raw materials on Thursday.
Disclosure: No positions at time of writing.