Australia, Auto ETFs In Focus On May Day

by on May 1, 2012 | ETFs Mentioned:

Tuesday opens what investors hope will be the eighth consecutive monthly increase for the Dow, as risky asset classes have continued to tack higher in recent weeks despite some Euro zone jitters and concerns about slowing job growth in the U.S. As May Day rallies were carried out across Europe in a new era of austerity, market remained relatively flat throughout the day there. 

Australian stocks and the Aussie dollar saw significant activity on Tuesday after the Australian central bank announced a hefty half point rate cut for the struggling Australian economy, which has seen its currency surge against major rivals in recent months. The iShares MSCI Australia Index Fund (EWA) was up slightly on the news, with the exchange rate impact preventing a more substantial gain. The CurrencyShares Australian Dollar Trust (FXA) plummeted by more than 1% on news of the large rate cut. FXA is still well into positive territory for the year, with the underlying currency having appreciated materially against the greenback. 

The IQ Australia Small Cap ETF (KROO), which holds smaller Australian stocks and makes a bigger allocation to commodity producing stocks, slid by about 0.8% to open the day. 

Also in focus on Tuesday was the automotive sector; Chrysler reported that automotive sales rose about 20% in April, which exceeded many analyst estimates. With Ford and GM scheduled to release results later in the day, the First Trust NASDAQ Global Auto ETF (CARZ) was down slightly in Tuesday morning trading. Auto ETFs have been standouts so far in 2012; CARZ is up almost 19% so far on the year, while the Global X Auto ETF (VROM) has added more than 22%. 

Also in focus on Tuesday was the Market Vectors Gaming ETF (BJK), which offers exposure to the global casino and gaming industry. WMS Industries, a major maker of slot machines and lottery products, slid sharply after missing forecasts with its earnings results. That could be a sign of challenging times for the casino and gambling industries, which have struggled mightily since the recession hit. Despite the bad news for WMS, BJK managed to tack higher in Tuesday morning trading. 

Disclosure: No positions at time of writing.