Markets took a roller coaster ride last week, as news from the eurozone and China dominated the media pipelines. The Spanish government unveiled a 2013 budget plan, which includes over $16 billion of spending cuts and tax increases aimed at persuading the European Union that the country is on track to meet its deficit-reduction targets. Meanwhile, China’s central bank is injecting a record amount of liquidity into the banking system, leading many investors to believe that additional stimulus measures are on the way. Despite all of the recent “stimulus” attempts from central bankers across the globe, investors will likely remain on eggshells for quite some time until further developments are made. This week, investors will once again see a number of economic reports around the world, which will hopefully bring confidence back into the markets. 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. Industrial Select Sector SPDR Fund (XLI)
Why XLI Will Be in Focus: This fund is one of the most popular in the world, with over $3 billion in assets and an average daily volume just over 13 million. XLI seeks to replicate the performance of the U.S. industrial sector and will be in focus this week as US ISM Manufacturing are slated to come out on Monday. Analysts are predicting a slight rise in manufacturing activity for the month of September, although evidence shows that the industry remains sluggish.[see also 17 ETFs For Day Traders].
2. 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 bank rate is reported on Thursday. Considering the latest developments in Spain and France, this ETF may be poised for some activity if the ECB makes any significant changes to its leading interest rate.
3. S&P 500 VIX Short-Term Futures ETN (VXX)
Why VXX Will Be In Focus: When it comes to measuring the level of uncertainty in the United States, no fund is as prolific as VXX, which exchanges hands over 42 million times per day. Its focus will come in on Thursday, as the minutes from the last Federal Reserve meeting are released. These will be the first minutes to come out after the announcement of QE3, which will hopefully give investors more insight into the central bank’s plans. Should details emerge that are not expected, VXX may see an increased level of activity. However, if the minutes are in line with expectations, volatility may cool off [see also How To Pick The Right ETF Every Time].
Follow me on Twitter @DPylypczak
Disclosure: No positions at time of writing.