Last week, President Obama claimed victory, locking in another four years at the coveted Oval Office. Though some were supportive of the President’s re-election, Wall Street made it quite clear who it had voted for as markets took a sharp nosedive in a post-election sell off immediately following the President’s victory. Though there were several better-than-expected economic reports last week, Obama’s re-election has placed investors’ sole focus on looming concerns over the Fiscal Cliff, as the automatic round of massive spending cuts and tax hikes now seem inevitable come January 1. Unless the split Congress manages to come up with a viable resolution, bearish momentum will likely continue for quite some time. This week, investors will once again see a number of economic reports from around the world. Below, we outline three ETFs that should see a fair amount of activity during the week ahead [see also 7 Simple & Cheap ETF Model Portfolio]:
1. MSCI Japan Index Fund (EWJ)
Why EWJ Will Be in Focus: This fund is designed to measure the performance of the Japanese equity market, and it is home to over $4.1 billion in total assets. Top holdings of EWJ include big names like Toyota and Mitsubishi, along with other big name Japanese companies. EWJ will come into focus on Monday as Japan’s GDP is released late Sunday night. Economists are predicting that Japan’s economic growth will drop to -3.4% from the previous 0.7% reading, a significant decline. If GDP results do not come in line with expectations EWJ may be in for a volatile session [see also 17 ETFs For Day Traders].
2. Market Vectors Germany Small-Cap ETF (GERJ
Why GERJ Will Be In Focus: This fund offers exposure to the small capitalization segment of the German equities markets, allowing investors to make a more “pure play” on the nation’s local economy. Last week saw several red flags for Germany, as sour industrial data added to investor concerns. GERJ’s focus this week will come on Thursday when Germany’s GDP will be reported, giving a good outlook on the future of the nation’s economy. Analysts are expecting GDP to come in at 0.8% versus the previously recorded 1.0% growth.
3. Euro Debt Fund (EU)
Why EU Will Be In Focus: This fund offers a way for investors to gain pure play exposure to European debt markets. Currently, EU has a heavy tilt towards debt securities from the “safer” European countries such as Germany, France, Luxembourg and Belgium. Investors should keep a close eye on EU this week as the eurozone’s gross domestic product is reported on Tuesday; analysts expect GDP to come in slightly higher than the previously recorded growth rate. Depending on the outcome, EU could experience higher levels of activity. [see also How To Pick The Right ETF Every Time].
Follow me on Twitter @DPylypczak
Disclosure: No positions at time of writing.