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.
- Markets rallied once again this week as investor optimism about Donald Trump’s economic plans rages unabated.
- The monetary divergence theme is back in fashion. The U.S. Federal Reserve suggested it will hike rates next month, while ECB President Mario Draghi hinted this week that the European central bank’s ultra-loose monetary policy is here to stay.
- A U.S. index composed of all leading indicators rose 0.1% in October, in line with expectations. In the previous month, the index rose 0.2%.
- Existing home sales in the U.S. jumped by 5.6 million in October, beating consensus estimates of 5.42 million. The September figure was upwardly revised to 5.49 million.
- In the U.K., the autumn statement published by the Chancellor of the Exchequer, Philip Hammond, revealed a pretty grim picture of the expected economic growth. The U.K. plans to borrow an additional 122 billion pounds to make up for the expected budget shortfall related to Brexit costs.
- Crude oil inventories fell by 1.3 billion barrels this week, compared with a rise of 5.3 million in the prior week.
- Durable goods orders rose as much as 4.8% in October, significantly above consensus of 1.5%.
- Jobless claims stood at 251,000 this week compared with 250,000 expected by pundits.
- The Federal Reserve released its meeting minutes, showing that policymakers are ready to increase interest rates in December. Fed funds futures contracts show 100% probability of the Fed raising rates next month.
- The business climate in Germany has not improved this month compared to November, with the German Ifo Business Climate Index slightly falling from 110.6 to 110.4, according to the Institute of Economic Research.
Risk Appetite Review
- The broad market (SPY ) has risen 0.74%, continuing a bull run that started when Donald Trump won the U.S. election.
- High Beta ETF (SPHB ) was again the best performer of the week, with a 2.88% rise.
- Low volatility (SPLV ) was the worst performer, jumping 0.64%.
Major Index Review
- Markets were all up for the week.
- iShares Russell 2000 Index (IWM ) posted the best performance for the third consecutive week, rising 2.25% since last Thursday. For the rolling month, (IWM ) also beat all other indexes, gaining as much as 9.70%. The index is composed of a host of small U.S. firms, which are expected to benefit the most from a Trump presidency given his focus on ‘putting America first.’
- The technology index (QQQ ) has risen the least of all this week, by just 0.50%. As usual, it’s Trump’s fault. Investors have become wary of investing in tech stocks because of the President-elect’s negative rhetoric. It’s unclear how Trump’s plans would affect tech companies, but he may be less willing to approve mergers or to provide incentives for clean energy firms, as well as increase their tax burden.
Foreign Equity Review
- Foreign ETFs were mixed.
- Russia (RSX ) was the best performer for the week and the rolling month, rising 3.32% and 2.44%, respectively. Russia is being seen in a more positive light by international investors after Trump promised to improve relations with the country’s leaders. Such a thaw could lead to the easing of economic sanctions. To find out more about ETFs exposed to particular countries such as Russia, use our ETF Country Exposure tool. Select a particular country from the world map and find a list of ETFs with exposure to that country.
- India (EPI ) was the worst performer for the week and the rolling month, dropping 1.86% and 10.96%, respectively. Undoubtedly, a ban of two banknotes in the country sparked a market rout, given that small businesses are heavily dependent on physical cash to run their businesses.
- Germany (EWG ) was the second worst performer this week, falling 0.60%. Uncertainty regarding the European Union’s future and an upcoming referendum on constitutional reform in Italy weighed negatively on the country’s stock market. Further information about Italy can be accessed by reading 3 ETFs to Play If Italy Leaves the European Union.
- Commodities were mixed for the week.
- Copper (JJC ) staged the best performance both for the week and the rolling month, jumping 6.07% and 24.24%, respectively – underpinned by Trump’s planned infrastructure spending.
- Gold (GLD ) dropped nearly 2% over the past week, faring the worst among the tracked commodities. A strong dollar and higher interest rate expectations are the primary reasons for the metal’s bad performance.
- Natural gas (UNG ) has been the worst performer for the rolling month, with a drop of 7.79%.
- The dollar posted the second best performance this week, beat only by the British pound. Check out our previous ETF Scorecard: November 18 Edition to compare ETFs mentioned on a week-over-week basis and to find more information about the dollar’s recent outperformance.
- The British pound (FXB ) increased 0.78% this week, regaining some of the lost ground following the Brexit debacle.
- For the rolling month, the U.S. dollar (UUP ) remains king with an advance of 2.70%, as the Federal Reserve prepares to raise its benchmark interest rate next month.
- The Japanese yen (FXY ) posted the worst performance for the week and the rolling month, as investors flew away from safe-haven assets such as gold, silver and the yen.
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Disclosure: No positions at time of writing.