Daily ETF Roundup: EFA Soars On Euro-Deal, VXX Plummets As Markets Rise

by on December 9, 2011 | ETFs Mentioned:

Today brought welcomed news to markets as the euro zone was able to reach an agreement on a budget deal. U.S. markets enjoyed strong days as a result, with the Dow jumping by 186 points, the NASDAQ jumping by 1.9%, and the S&P 500 enjoying a 1.7% gain on the day. The biggest winner came from 10 year bonds, which saw their prices skyrocket by 4.1%; a nice result especially considering the volatility they are bound to face with next week’s FOMC meeting. Though oil started off the day down big and gold started off the day strong, the tables turned to see the precious metal finish flat and oil to gain 1.4% on the day [see also 25 Ways To Invest In Crude Oil].

While the EU deal was something of a win for markets, others were not so convinced of its power. “After overnight talks in Brussels, European leaders were unable to secure the backing of all 27 EU members for treaty changes, with Britain among the countries rejecting the deal” write Kate Gibson and Polya Lesova. With one of the most powerful economies in Europe seemingly displeased by the deal, along with others, we may be in for another volatile week ahead as experts weigh in on where the global economy is headed. For now, we outline two of the most notable ETF performances on the day to keep investors informed on some of the biggest funds in the world and how they are faring in today’s environment [see also Dividend ETF Gets A Makeover].

One of the biggest ETF winners on the day came from the MSCI EAFE Index Fund (EFA). This ETF is designed to track performance of equity markets in European, Australasian, and Far Eastern markets, giving it heavy ties to today’s euro-zone deal. The ETF jumped 2.5% in trading today after hearing the news of the budget plan. Though the deal brought good news on the day, there is still some concern. “There was no doubt a significant suite of promises” made between the European Central Bank and the European Union, said John Kicklighter, currency strategist for Daily FX, “but they only curb the momentum of the crisis so far as they can restore market confidence” write Myra P. Saefong and V. Phani Kumar

One of the biggest ETF losers on the day came from the S&P 500 VIX Short-Term Futures ETN (VXX), which lost a back-breaking 7.1% during Friday’s session. What might be more amazing is despite this hefty loss, is that the fund is still up nearly 100% over the trailing 6-month period, as August was an extremely strong month for this ETN. VXX’s losses on the day all stemmed from the euro deal as well as a better-than-expected consumer confidence report from the University of Michigan. Though today’s losses were severe, the next few weeks are staged for active markets and the potential for this fund to regain some lost ground [see also Low Volatility ETFdb Portfolio Now Available].

Disclosure: No positions at time of writing.