To help investors keep up with the markets, we present our ETF Scorecard. The Scorecard takes a step back and looks at how various asset classes across the globe are performing. The weekly performance is from last Friday’s open to this week’s Thursday close.
- Global financial markets have been mixed for the week as investors attempted to ascertain on cool heads the potential impact of the Brexit fallout.
- U.S. markets are flat for the week, while the U.K. is slightly up.
- Continental Europe’s markets are down, as are emerging markets.
- U.S. Manufacturing Index came in higher than expected, at 53.2 versus 51.3 forecast and 51.3 previously, continuing the rebound from values indicating contraction at the beginning of this year.
- First signs of the Brexit impact are available. Construction PMI in the U.K. has fallen off a cliff, to 46 from 50.6 previously, indicating the industry is in contraction mode. Services PMI also fell to 52.3 versus estimations of 53.1 and from 53.5 previously.
- Amid this gloomy picture, the Bank of England promised to lower the required amount of capital reserves held by banks, freeing up 150 billion pounds for lending.
- U.S. Non-Manufacturing Services continued to defy gravity, rising to 56.5 in June from 52.9 previously. The forecast was for 53.3.
- Fed’s minutes revealed the policymakers did not raise interest rates because they were worried about the Brexit vote and slowing job growth at home.
- However, a new batch of data showed that unemployment claims fell to 254,000 from 270,000 last week, while on Friday the Bureau of Labor Statistics said the economy added 287,000 jobs last month compared to 175,000 forecast.
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Risk Appetite Review
- The broad market is flat this week, with the S&P 500 ETF (SPY ) jumping 0.08% as investors in the U.S. celebrated Independence Day and paused for reflection.
- Low Volatility ETF (SPLV ) was slightly down since last Thursday, by 0.21%, following a more than 5% gain in the previous week.
- The high beta ETF (SPHB ) has had the worst performance of the bunch, falling 1.50% for the week, as investors continued to shun risky assets.
Major Index Review
- Major indexes have posted mixed performance this week, with Europe and emerging markets falling.
- PowerShares QQQ Trust, Series 1 (QQQ ) has risen the most, 1.05% for the week, as investors found shelter in the tech-heavy index.
- The iShares MSCI EAFE ETF (EFA ) posted the worst performance for the week and rolling month, falling 2.54% and 8.52%, respectively. The financials-heavy index has been hit by renewed worries surrounding European banks.
- The Dow Jones Industrial Average ETF (DIA ) is the best performer for the rolling month, with a 0.37% loss.
Foreign Equity Review
- Most foreign ETFs are down for the week, with the exception of Japan, which is slightly up.
- The best performer for the week is iShares MSCI Japan ETF (EWJ ), up 0.17%.
- The worst performer for the week and the rolling month is iShares MSCI Germany Fund ETF (EWG ), down 4.42%% and 12.78%, respectively. Financials, which make up 16% of the index, have been hit the most.
- The best performer for the rolling month remains iShares MSCI Brazil Capped ETF (EWZ ), up 7.04%. The Brazilian market continued to recover this month; boosted by Federal Reserve’s inaction and optimism, the new government will implement growth-friendly reforms. This week, however, Brazil tumbled along with oil prices.
- All commodities have fallen this week, except for the safe-havens gold and silver.
- iShares Silver Trust (SLV ) is the best performer for the week and the rolling month. It has risen 2.35% since last Thursday, extending monthly gains to 20.17%. Silver has enjoyed bumper demand, particularly from Chinese investors, because of its safe-haven feature.
- Oil (USO ) is the worst performer of the week and rolling month, down 6.08% and 10.58%, respectively, as worries mount about a new supply glut. Crude inventories dropped by 2.2 million barrels this week, less than anticipated by analysts.
- Currencies have posted mixed performance for the week and rolling month, reflecting a risk-off sentiment.
- The British pound (FXB ) has continued its downward spiral following the Brexit vote. It is down 3.17% since last Thursday and a whopping 11.29% for the rolling month.
- The Japanese yen (FXY ) is the best performer of the week, gaining 1.87%, as investors flocked to safety in the aftermath of the Brexit referendum. The currency is also the best performer for the rolling month, with a 6.57% gain.
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Disclosure: No positions at time of writing.