Today marked the end of a tumultuous week that saw high volumes accompanied by high volatility. The week saw poor trading days until Thursday came, when all hell broke loose. A massive sell off led to losses of more than 3% in most major benchmarks, as investors hit the panic button in reaction to Fed Chair Ben Bernanke’s speech and policy decisions. Bernanke outlined the new “Operation Twist” which will consist of the Fed taking $400 billion from its short-term debt assets and purchasing long-term fixed income in an effort to flatten the yield curve and keep long-term interest rates in check. Like the majority of his previous speeches, markets reacted poorly, as investors seem to have a knack for selling big after the Fed leader addresses the nation [see also Northern Trust Returns To ETF World, Launches Four FlexShares].
Another issue that has been looming all week has been the debt crisis in Europe, as each day brings news that pushes and pulls markets across the break-even line. With all of the market volatility, a number of assets took a hit on the week; commodities, in particular, faced a slaughterfest. The S&P GSCI Index, which consists of 24 commodities, fell to its lowest levels since December after dropping more than 4.5% today. With a number of heavy movements on the day, we outline two of the most notable ETF performances from Friday’s trading session below.
One of the biggest ETF winners on the day came from the Emerging Markets ETF (VWO). This fund features exposure to a number of big-name emerging economies like China, Brazil, Indonesia, and South Korea. Today’s strong performance likely stemmed from a bounceback in emerging markets overall. Thursday’s sell-off was especially hard on emerging markets, as some funds focused on individual countries tanked as much as 10%. While U.S. equities were relatively flat on the day, investors bought back in to a number of emerging markets that were trading at something of a discount when the day started. All in all, VWO gained 2.2% in Friday’s session [see also What’s Crushing The Austria ETF (EWO)?].
One of the biggest ETF losers on the day was the Market Vectors TR Gold Miners (GDX), which faced significant headwinds after gold’s dismal performance on the week. While gold has been consistently hovering around the $1,800/oz barrier, this week saw it tumble all the way below $1,700/oz, with most of the losses occurring today. Gold itself fell 5.7% while GDX managed to lose only 4.9%, an interesting result given that GDX is typically thought of as a leveraged play on gold itself. Top holdings in this ETF include bellwether mining firms like Barrick Gold and Newmont Mining [see also Three Reasons Why Gold Is Overvalued].
Disclosure: No positions at time of writing.