Daily ETF Roundup: DBB Sinks On Weak Copper, EWZ Rises On Growth Prospects

by on March 30, 2011 | ETFs Mentioned:

American equity markets rose modestly across the board in Wednesday trading as a solid figure from the ADP employment report helped to buoy stocks. The Dow rose by 71 points on the day while the broader indexes– specifically, the Nasdaq and S&P 500– managed to post more robust gains of 0.7% each in the session. Most of the market’s gains came immediately following the ADP report as the payroll organization reported what many saw was a healthy growth in jobs at just over 200,000 created. This news helped to boost investor sentiment over Friday’s payroll report, pushing traders into risky assets in the session. Meanwhile, commodity markets were more mixed as gold managed to gain six dollars an ounce but oil retreated by about 50 cents a barrel, declining to the $104.30 mark. Additionally, soft commodities fell across the board, while heating oil, natural gas, and RBOB Gasoline all managed to rise despite crude oil’s slump on the day.

One of the biggest winners in the ETFdb 60 was the iShares MSCI Brazil Index Fund (EWZ) which rose by 2.1% in Wednesday trading. Today’s gains were largely the result of strong performances from banking firms which were boosted by a report from the Brazilian central bank and its target for inflation in 2011. In the report, the central bank stated that it would be too costly to bring the inflation rate down to 4.5% this year, instead hoping to ease the economy into convergence sometime in 2012. “In our view, the first quarterly inflation report of the year made a clear statement that the tightening cycle is getting close to the end, or at least a pause,” wrote economist Marcelo Salomon at Barclays Capital in a note Wednesday. This release was cheered by financial companies and firms in industrial sectors alike as the news suggests that borrowing costs will not increase in the immediate future and that rates could remain manageable [see charts of EWZ here].

One of the biggest losers on the day was the PowerShares DB Base Metals Fund (DBB) which slumped by 1.4% in the session. Today’s losses came as investors fretted over the impact of $100/bbl. oil on global growth as well as concerns over a slowdown in manufacturing activities in Japan due to the tsunami. Factories remain shutdown across the disaster-stricken country as power is hard to come by and fears continue to plague installations over the amount of uranium in products. This slowdown could curtail copper demand in the near term and $100 oil certainty isn’t helping matters in the rest of the world either. As a result, copper prices for May delivery fell by over seven cents a pound on the news to $4.24/lb, representing a near five percent loss for the red metal since the beginning of the month, sending DBB plunging on the day [see fact sheet of DBB here].

Disclosure: Eric is long EWZ.