American equity markets finished the week on a high note as investors bought up securities ahead of the three day weekend. The Dow lead the other major indexes thanks to its 0.6% gain, followed by a 0.2% jump in the price of the S&P 500 and a 0.1% move higher in the tech-heavy Nasdaq. Commodity markets, on the other hand, were much more mixed as gold finished shy of $1,390/oz. but oil tumbled to finish at just $86/bbl. The real movement came from a variety of lesser-known commodities as softs and grains tumbled across the board, in fact, silver was one of the few commodity winners gaining slightly more than 3% in the session.
The market largely drifted higher as traders bought up securities ahead of the holiday weekend thanks to momentum and relatively strong data from corporate America. By sector, markets were pretty mixed as some of the smaller financials and industrial companies surged but weakness was prevalent across some of the big name tech companies as well as basic material firms. Analysts also managed to shrug off plans by China to raise banks’ reserve requirement ratios as well as fears over an oil price surge should Middle East tensions continue. “Some of the geopolitical events we’re seeing in the Middle East do pose another risk,” said Rob McIver, co-portfolio manager of the Jensen Portfolio. “It’s interesting that that’s not having more of a negative effect on the bulls at the moment.”
One of the biggest winners in the ETFdb 60 was the iShares MSCI South Korea Index Fund (EWY) which gained 1.3% in the session. These gains were largely the the result of the approval of a free trade agreement between Korea and the EU, which looks to greatly boost trade between the two economic powers. The deal must now go to the Korean National Assembly for approval but is widely expected to pass thanks to a large majority for the Grand National Party which is pro-EU FTA. “This deal will bring significant economic benefits,” Tomasz Kozlowski, the EU’s ambassador to South Korea, told reporters Friday. “We expect it to double our EU-Korea trade in the long term.” Due to this boost, investors bought up Korean securities across the board and sent EWY sharply higher for the session [see holdings of EWY].
One of the biggest losers on the day was the Materials Select Sector SPDR (XLB) which declined by 1.1% to close out the week. These losses came as commodity prices declined across the board, helping to push down some of the biggest names in the mining and production segments of this industry. In fact, the fund’s top component, Freeport-McMoRan Copper and Gold (FCX) declined by 4.2%, while Dow Chemical and Monsanto also declined on the day as well. This weakness in some of the biggest names in the fund helped to set a gloomy tone for the sector heading into the holiday-shortened week [see charts of XLB here].
Disclosure: No positions at time of writing.