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.
- Britons headed to the polls on Thursday for the second time this year. Prime Minister Theresa May had called for snap elections in April in a bid to boost her majority in Parliament and gain the upper hand in upcoming Brexit negotiations. But May’s bet went terribly wrong, with her Conservative Party failing to gain the majority sought. The Conservative Party won 316 seats, down from 330 in 2015 and short of 326 needed for a majority, creating a cloud of uncertainty over Britain and May’s future. Either Brexit negotiations may get delayed or negotiations may continue without Theresa May at the table.
- The European Central Bank sent mixed messages at its press conference on Thursday. On one hand, it upwardly revised the growth outlook, but on the other it lowered its inflation forecast, citing falling energy prices. The bank kept interest rates on deposits unchanged, at negative 0.4%, and said the current low rates may stay for an extended period of time. Mario Draghi said the ECB will continue its quantitative easing program at least until December, and reiterated it is prepared to continue it beyond that period.
- In the U.S., nonfarm payrolls, an important indicator of labor market strength, stood at 138,000 for the month of May, considerably below expectations of 185,000. In April, the U.S. economy added 174,000 jobs, a figure that was revised downward from the originally quoted number of 211,000 jobs.
- The U.S. unemployment rate, meanwhile, fell to record lows of 4.3% compared to 4.4% in April, while the participation rate dropped from 62.9% to 62.7%.
- The U.S. trade deficit widened to $47.6 billion in May from a revised $45.3 billion in the previous month.
- British services PMI fell to 53.8 in May, after two months of consecutive increases. A figure above 50 indicates expansion. Pundits had forecasted a PMI of 55.1.
- U.S. crude oil inventories have finally registered a rise, after eight weeks of decreases. For the week ended June 2, oil stockpiles increased by 3.3 million barrels to 513.2 million.
- Japanese GDP growth for the first quarter was revised down to 0.3% from 0.5% previously. On an annualized basis, the Japanese economy grew by just 1% compared to 2.6% estimated beforehand.
- U.S. jobless claims came in at 245,000 for the week ended June 3, roughly in line with estimates. In the prior week, around 248,000 people filed for unemployment benefits.
- Chinese trade surplus stood at $40.8 billion in May. Imports jumped by 14.8%, while exports advanced by 8.7%.
Risk Appetite Review
- The Broad Market (SPY ) was the best performer this week, although it rose by just 0.15%.
- Low Volatility (SPLV ), meanwhile, was the worst performer of the week, posting a decline of 0.73%.
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Major Index Review
- Global equities were largely up this week, but posted small gains.
- iShares Russell 2000 Index (IWM ) is again the best weekly performer, leading the pack with a gain of 1%. The small-cap index is finally gaining some traction with investors, after being ignored for months.
- iShares MSCI EAFE Index Fund (EFA ) – an index containing European, Asian and Australian equities – was the only faller this week, due to a retreat in European stocks. (EFA ) fell 0.60% since last Thursday.
- For the rolling month, technology stocks (QQQ ) were ahead of every other index, advancing an impressive 4%.
- Dow Jones (DIA ) was the worst monthly performer, up by only 0.82%.
- To see how these indices performed last week, check out our ETF Scorecard: June 2 Edition.
- Sectors were mixed.
- Telecom stocks are on a tear lately. (XTL ), the telecom ETF, is the best performer for the second consecutive week. This week (XTL ) rose by 2.15%, making it the best monthly performer with a gain of 5.55%.
- Utilities (XLU ) have posted the biggest drop since last Thursday, falling 1.67%. However, utilities are among the best monthly performers, due to gains staged in previous weeks.
- For the rolling month, the energy sector (XLE ) posted the worst results, falling 4.52%. A drop in oil and natural gas prices contributed significantly to (XLE )’s weak performance.
Foreign Equity Review
- Foreign equities were mixed.
- Chinese equities (FXI ) advanced about 0.50%, enough to become the best weekly and monthly performer. Strong data of late, including impressive gains in imports and exports, raised the nation’s attractiveness. The robust performance over the past month is a testament to the fact that investors ignored alarming signals from credit ratings agency Moody’s, which downgraded the government debt on quickly rising internal borrowings.
- Germany (EWG ) has lost 1.30% over the past week, representing the worst performance.
- Brazil (EWZ ) has declined 6.54% for the rolling month, as the country’s equities are still feeling the heat from a bribery scandal involving President Michel Temer. The Supreme Electoral Court recently decided to exclude testimony against Temer from some executives at an engineering company, suggesting the case may be thrown out. However, it is early for Temer to celebrate given that the debacle left him weakened and could still lead to his sacking.
- To find out more about ETFs exposed to particular countries, use our ETF Country Exposure tool. Select a particular country from a world map and get a list of all ETFs tracking your pick.
- Commodities were rather mixed.
- Copper (JJC ) is again the best weekly performer, jumping 2.24% over the past five days on weather issues at some mines in South America and recurring labor strikes in Indonesia.
- Oil (USO ) has continued to head lower this week, being the single faller with a loss of more than 4%. There is increasing evidence of a supply glut, despite OPEC acting to rein in production.
- Due to rising stockpiles of late, natural gas (UNG ) is the worst monthly performer. (UNG ) has dropped nearly 8% over the past 30 days.
- Use our Head-to-Head Comparison tool to compare two ETFs such as (UNG ) and (JJC ) on a variety of criteria such as performance, AUM, trading volume and expenses.
- Currencies were mixed as well.
- The British pound’s (FXB ) performance would have been among the best if not for a Friday fall due to the disastrous electoral score registered by Theresa May. At the close on Thursday, (FXB ) was up about 0.60%.
- The Australian dollar (FXA ) posted the best gains this week, soaring nearly 2% on upbeat trading data from China, the country’s most important trading partner.
- Europe’s single currency (FXE ) is the worst performer of the week, declining about 0.47% due to a generally dovish tone struck by ECB at its Thursday meeting.
- The Japanese yen (FXY ) is the best monthly performer, up 3.59%.
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Disclosure: No positions at time of writing.