International markets and related exchange traded funds maintained their momentum Friday, with European stocks closing at an all-time high, as a strong earnings season and the European Central Bank’s supportive monetary policy outlook helped offset concerns over the more infectious Covid-19 Delta variant.
“The Monday selloff seems like a moment of brief panic, and … was enough, it appears, to reset sentiment and activity and prompt a resurgence of bullish momentum. Central bank(s) have done their bit to allay fears, most notably the ECB this week,” Chris Beauchamp, chief market analyst at online trader IG, told Reuters.
The European Central Bank (ECB) on Thursday kept its monetary policy steady and was committed to acquiring 1.85 trillion euros, or $2.2 trillion, of bonds until March 2022 as part of its Pandemic Emergency Purchase Program, CNBC reported.
The ECB said in a statement that interest rates will remain “at their present or lower levels until it sees inflation reaching two per cent well ahead of the end of its projection horizon and durably for the rest of the projection horizon, and it judges that realized progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilizing at two per cent over the medium term.”
“This may also imply a transitory period in which inflation is moderately above target,” it added.
The ECB is also considering the resurgence in coronavirus cases, which could weigh on the recovery process.
“The reopening of large parts of the economy is supporting a vigorous bounce-back in the services sector. But the Delta variant of the coronavirus could dampen this recovery in services, especially in tourism and hospitality,” ECB President Christine Lagarde said, according to Reuters.
Investors interested in international markets can consider ETF strategies for foreign exposure. For example, the Avantis International Equity ETF (AVDE) is built upon an academically supported, market-tested framework to identify securities with expected high returns based on market prices and other company information. Relying on trading and portfolio management processes, the Avantis team analyzes whether the perceived benefits of a trade overcome its associated costs and risk. AVDE primarily invests in a diverse group of companies of all market capitalizations across non-U.S. developed market countries, sectors, and industries, emphasizing investment in companies believed to have higher expected returns.
Additionally, the American Century Quality Diversified International ETF (QINT) utilizes the American Century Investments Intelligent Beta methodology, which systematizes many of the same attributes that fundamental research and security selection seek to identify in a rules-based, indexed approach. QINT is a large foreign blend fund that seeks to enhance core international exposure. Its rules-based approach analyzes each stock’s quality, growth, and value characteristics to select individual securities. It also dynamically adjusts exposures to take advantage of prevailing market conditions.
For more news, information, and strategy, visit the Core Strategies Channel.