Daily ETF Roundup: EWJ Jumps On Higher Growth Forecast, UNG Continues Slide

by on January 25, 2011 | ETFs Mentioned:

Despite an extremely rough start to the day’s session, markets managed to find strength in the final hour of trading to make back nearly all of their once-heavy losses. In fact, the Dow, which at one point was down almost 80 points, finished the day down just three while the Nasdaq and S&P 500 managed to creep into the green despite similar weakness in the mid-morning session. Commodity markets were also weak across the board as heavy losses were experienced in the softs, grains, and energy products in particular. The two headline commodities, oil and gold, both were down as well as gold slid by close to $12/oz. and oil fell by almost 2% thanks to concerns regarding supply increases.

Markets had initially slumped on weakness from two major companies; American Express and Johnson & Johnson, which both reported disappointing figures to investors sparking a widespread selloff. The consumer products titan slipped as it revealed that its fourth quarter sales fell 5.5% from the year ago period while AmEx announced that it missed some of the more optimistic earnings predictions for its Q4 report. However, investors returned to the market in droves in order to buy into shares ahead of a crucial State of the Union Address by President Obama in which many believe he will outline further stimulative measures for the economy as well as plans to reign in the surging budget deficit. “Traders are leery of being short into the State of the Union, given the market’s resilience and inability to pull back with any sense of velocity over the last few weeks,” said Michael James, managing director of equity trading at Wedbush Securities Inc.

One of the biggest gainers in the ETFdb 60 was the iShares MSCI Japan Index Fund (EWJ) which rose by 0.9% on the day. Today’s gains for the often-overlooked Japanese market came thanks to a somewhat rosier economic forecast for the island nation by the country’s central bank. Although the BOJ kept rates at their ultra-low zero-0.1% rate, the bank did bump up its economic growth forecast for the remainder of the fiscal year to 3.3% from its previous prediction of 2.1% in October, giving many hope that the nation may have finally bottomed out and is slowing pulling itself out of its multi-decade malaise [see holdings of EWJ here].

One of the biggest losers in the ETF world was the United States Natural Gas Fund (UNG) which tumbled by 2.4% in Tuesday trading. UNG continued its fall for the second straight day as the fund slid on an outlook for warmer weather over the next few weeks, especially in the Western part of the country in early February. This news, compounded with the ever-present supply overhang, pushed natural gas down again in today’s session, erasing much of last week’s gains in the market. As a result UNG’s once robust gain for 2011 has shrank significantly; the fund is now up just 1.6% on the year and has even posted a 0.1% loss over the past week [see more charts of UNG here].

Disclosure: No positions at time of writing.