ETFdb.com analyzes the search patterns of our visitors each week. By sharing these trends with our readers, we hope to provide insights into what the financial world is concerned about and how to position your portfolio.
There was no central theme this week, but some topics that have gotten interest are biotech ETFs, Japanese yen, the consumer discretionary sector, oil, and Russia.
Biotech: Seeing off Hillary’s Intervention
With the biotechnology stocks showing strength this week amid a tepid broad market, it is no surprise that viewers have flocked to our biotechnology ETF page. About 64% more readers viewed the web page this week compared to last week ‒ the largest increase than any other topic. What drove traffic to the subject was a healthy mid-single digit growth in all ETFs covering the sector, despite the overall market being flat. Investors have resumed their buying activity in the industry, as fears sparked by US presidential hopeful Hillary Clinton to crack down on drug price increases have proved overblown. However, it is probably too soon to celebrate, as all long biotechnology ETFs are still deep in the red for the year; many of them are down at least 20%, while the leveraged ones are much worse. The largest biotechnology ETF, the iShares Nasdaq Biotechnology ETF (IBB ), is down 20.3% year to date, despite having risen 5.1% this week. The S&P 500, in comparison, posted flat gains over both periods.
Still, the biotechnology industry’s long-term prospects look bright, especially if you consider the aging population in the United States, Europe, and China, who will increase demand for drugs in the years ahead. With that in mind, there is reason to believe the market has turned a corner.
The Japanese Yen: Kuroda’s Uphill Struggle
The Japanese Yen is continuing to defy gravity by hitting new highs, giving a headache to the country’s central bank, which has been terrorized by the currency’s ascent. This week, the yen surged to a 17-month high, taking the second spot in our top five topics. Our Japanese Yen ETF page has seen its traffic increase more than 35% this week compared to the previous one. The main long yen ETF, CurrencyShares Japanese Yen ETF (FXY ), is up 2% over the past week, and nearly 9% since the beginning of the year.
The currency’s continued strength may force the central bank to act. A recent warning by the governor, Haruhiko Kuroda, that said he was watching foreign exchange developments closely failed to stall a rally in the currency, which is viewed by investors as a safe haven. But if the yen’s strength persists, Kuroda will be constrained to ease monetary policy further by expanding QE, lowering deposit rates, or both. That is an increasingly likely outcome, given that the central bank had faced challenges hitting its inflation target even before the yen strengthened. The Federal Reserve’s recent dovish remarks weakened the US dollar, which put additional pressure on the currency and on Kuroda to act.
Oil: Back in Vogue or Temporary Love
Has the oil taken a turn for the better, or was last month’s recovery was just a small pickup before a new selling wave will ensue? This seems to be the question that market observers have posed themselves since the price of oil began rebounding about a month ago. Oil’s volatility has attracted our viewers to ETFs tracking commodities not just this week, but in previous weeks as well. (USO ), an ETF tracking front-month West Texas Intermediate futures, lured more than a 30% increase in traffic to our page this week compared to last week.
The high volatility was likely the main factor behind the page’s popularity. Consider this: crude oil fell 10% in just two days at the beginning of this month, but erased almost all those losses in the last three days. One major reason for this sharp rebound is due to a report published Wednesday by Energy Information Administration, showing crude stocks fell 4.9 million barrels last week. The surprise drop in inventories could mean that US producers are finally cutting production, while demand is holding steady. The market has reacted to this possibility by pushing up prices, but the future direction of crude will probably be decided later this month when large oil producers, including Russia and OPEC members, meet in Doha to negotiate a freeze in output.
Consumer Discretionary: To Shop or Not to Shop
While our biotech ETF page has attracted viewers for all the good reasons, the consumer discretionary ETF page did so for all the bad ones. Traffic to our consumer discretionary ETF page rose nearly 27% this week compared to the last. The Consumer Discretionary Select Sector SPDR (XLY ) is flat this week and up nearly 2% year to date, which is in line with the S&P 500’s returns over the same period.
The sector has lagged compared to last year, mainly because of uncertainty regarding the health of the US economy and consumer. With Amazon and Home Depot being the largest holdings of XLY, there is no doubt that a recession or even a mere slowdown in output would hit the sector hard.
From Russia with Love… A Recovery
Investors betting against Russian equities this year may have been caught wrong-footed. (RSX ) and (ERUS ), two of the largest ETFs out there offering exposure to the country, are up 11.4% and 15.5%, respectively, this year. Both ETFs rose this week as well, with RSX showing gains of 0.3% and ERUS of 1.3%.
With a strong equity market and oil making the headlines, it comes as no surprise that Russia made it to our top. The Russian ETF page has seen the viewership increase more than 22% this week. Heavily dependent on the oil market, Russia garners interest whenever this commodity soars or tumbles. In the coming weeks, the country’s officials will have a chance to boost equity markets by attempting to find common ground with OPEC members on the price of oil. Russia sees oil prices in a range between $45 to $50 per barrel as acceptable.
The Bottom Line
This week a strong recovery in biotechnology ETFs has left many wondering whether the market has begun to dust off after a sustained fallout brought about by Hillary Clinton. While oil’s volatility attracted interest in the ETFs tracking the commodity and the heavily-exposed to the crude, Russia. The Japan central bank’s failed attempts to halt a rise in the yen has also made the headlines. With the currency hitting new highs, it is interesting to watch the bank’s future actions and the market reaction to them. Finally, the consumer discretionary sector garnered interest from our readers, although the exact reason seems to be less straightforward.
By analyzing how you, our valued readers, search our property each week, we hope to uncover important trends that will help you understand how the market is behaving so you can fine-tune your investment strategy. At the end of the week we’ll share these trends, giving you better insight into the relevant market events that will allow you to make more valuable decisions for your portfolio.