Markets got off to a rocky start this morning as investors seemingly ignored the major decisions of central bankers across the globe as well as the surprisingly positive U.S. jobs data. Understandably so, the focus today was instead on the blaring red flags that have popped up in the market over the last few weeks, painting a rather grim picture for the global economy. After celebrating the nation’s Independence Day, U.S. investors looked at the foreign central bank rate cuts not as an overwhelmingly positive decision, but as a sign of continuing economic weakness that has no choice but to be propped up by further stimulus measures [see also 10 Surprising ETF Stats From Mid Year ETF Data].
Before this morning’s opening bell, two major central banks announced the lowering of their benchmark lending rates: the European Central bank slashed its rate by 0.25%, while China dropped their interest rates for the second time in less than a month. Although the Bank of England did not change their rates, they did announce the expansion of their bond-buying program to help prop up the country’s economy [see ETF Technical Trading FAQ].
Below we outline one ETF that has been impacted by today’s major headlines:
iShares MSCI United Kingdom Index Fund (EWU)
Not surprisingly, this ETF gapped significantly lower at open as investors digested the impact of the Bank of England’s decision to increase stimulus measures. The $78 billion boost to the country’s bond-buying program sent EWU into a tumble in early morning trading, only to have it inch slightly higher during early afternoon hours. Currently EWU is down 0.84% (as of 11:56 AM July 5, 2012) [see our Euro Free Europe ETFdb Portfolio].
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Disclosure: No positions at time of writing