After surprise news of a Chinese yuan revaluation and a financial reform bill in the U.S., last week was an eventful one for markets around the world. U.S. equities experienced a sharp downturn to start things off, as markets sank on weak home sales numbers and a downgrade of BNP Paribas by Fitch Ratings, suggesting that trouble could still be brewing in the euro zone (especially for the largest of banks). With the second quarter drawing to a close, the outlook remains cloudy; the next month will undoubtedly be interesting, starting with a week full of important data releases, international summits, and central bank meetings. Below, we profile three ETFs that figure to be in focus over the next several days [for more ETF ideas, sign up for our free ETF newsletter]:
iShares MSCI Germany Index Fund (EWG)
Why EWG Could Be In Focus: In the wake of the G-20 summit in Toronto, it looks to be an interesting week for Germany. To top things off, the country also has a presidential election on Wednesday which is being hailed by many as an unofficial referendum on the government of Chancellor Angela Merkel. Merkel’s government is growing unpopular as the citizens of Germany become increasingly opposed to further bailouts of free-spending euro zone nations. Should Merkel’s candidate fail to win out, her days as Chancellor could be numbered, which could impact the popular Germany ETF [also see World Cup of ETFs: Plays on All 32 Countries].
Market Vectors Agribusiness ETF (MOO)
Why MOO Could Be In Focus: Monsanto, an agribusiness giant and industry bellwether, reports earnings this week. The company is one of the top five holdings of MOO, making up about 7.5% of the fund’s total assets. In addition to the quarterly earnings, the company’s outlook for the industry will eagerly anticipated and likely to impact other companies in the fund as well [see more information on MOO's holdings here]. Monsanto is scheduled to release earnings on June 30th before the market opens; the consensus estimate is for quarterly earnings of 80 cents a share on revenues of $3.17 billion.
Rydex CurrencyShares Swedish Krona Trust (FXS)
Why FXS Could Be In Focus: The Swedish central bank, also known as the Riksbanken, is scheduled to release its decision regarding interest rates on the first. Some analysts are predicting that the central bank will increase rates by a quarter of a percentage point to 0.5%. However, neighboring Norway just had a central bank meeting, keeping its benchmark rate steady at 2% and lowering its average rate for 2010 from 2% down to 1.75%. Should Sweden be able to buck the trend and raise rates, look for FXS to surge higher, especially given the weakness in the dollar and the euro zone [also read Euro Weakness Dragging Down Krona and Swiss Franc ETF].
EWY: South Korea remained classified as an emerging market according to MSCI Barra. While likely disappointing for the country, this decision likely prevented a sell off of the securities by emerging market funds that had substantial holdings in South Korean companies. EWY sold off much like other markets around the world and finished the week slightly lower [see charts of EWY here].
CYB: As announced last weekend, China made its currency more flexible against the dollar in a move that was cheered around the world. Despite the potential for a stronger yuan, CYB was relatively unaffected; the fund had a rocky Monday and Tuesday and finished the week right where it started [see technical analysis of CYB].
PLND: Poland was in focus as the country went to the polls to elect a new president after the tragic plane crash killed the country’s leader and much of his staff roughly two months ago. Much like the overall market, PLND sank over the past week, posting a loss of about 4% [see more information on PLND's fact sheet].
Disclosure: No positions at time of writing.