Yesterday, investors couldn’t stay further away from equities as the latest Spain bailout developments cast an atmosphere of doubt over the markets. Understandably, panic selling quickly ensued, pushing major equity indexes lower across the board. Today, however, it’s a much different story on Wall Street. Whether its short-term memory loss, or simply the case of fabricated idealism, investors are now “hopeful” that Spain’s bailout plan will successfully restore some much needed confidence in the country’s economy [see also Seven Simple & Cheap ETF Model Portfolio].
With refortified confidence, trading in the Euro zone ended on a high note today, allowing markets to inch their way up into positive territory with relatively modest gains at closing. Despite the uptick in European equities, Italian and Spanish bond yields rose sharply, giving proof that perhaps investors are still not ready to cast aside all their European fears just yet.
As domestic markets opened, Wall Street responded with renewed enthusiasm, pushing equities higher; the Dow Jones Industrial Average, Nasdaq, and the S&P 500 are all up on the day at the time of writing. Below we highlight two ETFs that have been impacted by today’s major headlines:
Vanguard European ETF (VGK)
With Euro Zone equities closing in positive territory, this ETF gapped higher at the start of the trading session only to surge higher after a slight mid-morning dip. VGK is up around 1.2% today (as of 11:20 AM June 12, 2012). As investors continue to digest the latest developments on Spain’s bailout plan, this ETF may experience higher levels of activity throughout the day [see also Low Volatility ETFdb Portfolio].
iShares MSCI United Kingdom Index Fund (EWU)
Early this morning, U.K. manufacturing data came in much worse-than-expected, hitting the country with yet another blow as the nation struggles to jump start its economy into recovery. Although manufacturing and industrial production fell, iShares’ EWU continues to inch higher, gaining approximately 1.7% today (as of 11:20 AM June 12, 2012) [see also ETF Technical Trading FAQ].
Follow me on Twitter @DPylypczak
Disclosure: No positions at time of writing.