Three ETFs To Watch This Week: EWA, IVV, XLPS

by on December 6, 2010 | ETFs Mentioned:

Last week was a roller coaster ride for equities, as markets began the week by plunging, then surged based on strong U.S. data. The week closed out with markets straddling the gain/loss line as U.S. unemployment saw an unexpected jump from 9.6% to 9.8% on Friday. Europe was one of the the main focuses of the week, with Ireland officially receiving a bailout equal to roughly $100 billion, in an effort to save their drowning economy from default. News then began to emerge that the debt situation in Portugal was only worsening, leading to widespread fear that yet another nation from the Euro-zone will need a large cash infusion to stay afloat. Meanwhile, gold had a strong week, as the precious metal eclipsed the $1,400/oz. mark yet again, once more within striking distance of its all-time high [see also Surging Warsaw Puts Polish ETFs In Focus].

This week will be interesting, as investors are hoping that markets can continue the surge they saw on both Wednesday and Thursday. December got off to a promising start, but data from banks around the world will shape how its performance plays out this week. With a number of earnings reports and government data both in the U.S. and internationally, investors will have plenty of information to chew on as the week progresses. With the majority of data coming outside of Europe, investors can only hope that this week will be enough to calm down the fears originating from several indebted nations in the troubled euro-zone.

iShares MSCI Australia Index Fund (EWA)

Why EWA Will Be In Focus: EWA measures the performance of the Australian equity market. The fund focuses the majority of its assets in the financials (43.4%) and industrial materials (27.8%) sectors. In 2010 this ETF has paid out 9.3% with a healthy dividend yield of 2.7%. A variety of important Aussie data will put this fund in focus for this week. Early in the week, the Reserve Bank of Australia will release its rate decision, which it is expected to hold at a constant 4.75%. Central bank rate decisions will effect consumer borrowing and spending, as a higher rate makes it more difficult to borrow money, while a lower one encourages small businesses and others to take loans. Then on Thursday, Australia will release its unemployment rate and unemployment change, which as the U.S. saw this week, can be a big momentum shifter for the entire market. Unemployment is expected to drop by 0.2% which would likely translate into a strong day for Aussie equities [see also How Investors CAN Play The BRIC Through A Different Set Of Country ETFs].

iShares S&P 500 Index Fund (IVV)

Why IVV Will Be In Focus: IVV tracks the large capitalization sector of the U.S. equity market. With a market cap nearing $24 billion, it is safe to say that this is one of the most popular ETFs currently available to investors. The fund’s top holdings feature big name firms like ExxonMobil, Apple, and Microsoft. This Friday will mark the release on the U.S. international trade figures, which will weigh heavily on this ETF, as many of its holdings are multi-national corporations that are heavily engaged in exporting activities. The difference between the current levels of imports and exports will be a valuable gauge of economic trends both here and abroad. Typically, a smaller trade deficit will mean a stronger dollar, but the stronger the exports, the better the corporate earnings and stock market. Given the rather large Australian trade deficit, a majority of investors will likely be hoping for high exports as this report comes in the close out the week [see also Closer Look At S&P 500 ETF Options ].

S&P SmallCap Consumer Staples Portfolio (XLPS)

Why XLPS Will Be In Focus: This ETF tracks the S&P SmallCap 600 Consumer Staples Index, which is comprised of common stocks of U.S. consumer staples companies that are principally engaged in the businesses of providing consumer goods and services that have non-cyclical characteristics, including tobacco, textiles, food and beverage, and non-discretionary retail. The young fund has had a strong first year, gaining nearly 13%. XLPS will important to watch this week, as two of its top holdings will be reporting earnings from their most recent fiscal quarter. Both United Natural Foods and Diamond Foods will be releasing their earnings on Wednesday of this week. Analysts estimate that United Natural Foods will bring in EPS of $0.39, while Diamond foods is predicted to report EPS of $0.60.

Disclosure: Photo courtesy of Matthew Field. No positions at time of writing.

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