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.
- This week was full of events.
- France is on track to beat the populism wave, as polls indicate independent candidate Emmanuel Macron will defeat far-right anti-immigrant contender Marine Le Pen by a large margin. Last Sunday, Macron emerged as the winner of the French elections while and Le Pen took second place, in a stunning upset for the two main political parties. Macron and Le Pen will face off again in the second round on May 7.
- The European Central Bank left interest rates unchanged at record lows and kept the €60 billion asset-purchase program in place. ECB President Mario Draghi struck a slightly more upbeat tone compared to the last session, saying risks are moving toward a more balanced configuration but are still tilted to the downside. Draghi noted inflation is yet to show a sustained upward trend. At 1.5%, inflation is still below the central bank’s target of 2%, although Draghi acknowledged the risk of deflation faded for the time being.
- Here at home, the Trump administration unveiled a bold tax-overhaul plan consisting of dramatic tax cuts. Under the yet-to-be-passed blueprint, the corporate tax would be cut to 15% compared to 35% now and the repatriation tax reduced to 10%. Capital gains tax would be lowered to 20% from 23.8% now. The plan is certain to meet opposition not only from Democrats but also from some Republicans who may be worried about a rising government deficit. The Tax Foundation said the plan would reduce revenues by $2 trillion over the next ten years and is unclear if economic growth could compensate for the lost income.
- U.S. existing home sales jumped 4.4% to 5.71 million in March, representing the best showing since May 2010. Year-over-year, existing home sales jumped 5.9%.
- U.S. Manufacturing PMI fell to 52.8 in April from 53.4 the previous month, disappointing analysts who on average expected an increase to 53.9. Services PMI also fell to 52.5 from 52.9.
- Consumer confidence came in lower than expected in April at 120.3 against estimates of 123.1. In the previous month, consumer confidence was firm at 125.6.
- Crude oil inventories have dropped for the third week in a row. For the April 21 week, stockpiles decreased by 3.6 million barrels.
- Germany’s business climate continued to improve in March, with IFO rising to 112.9 from 112.4 previously. The rate is the best since July 2011.
- The Bank of Japan left monetary policy unchanged at its recent meeting, but upwardly revised the forecast for GDP growth to 1.6% from 1.5% before.
- German flash manufacturing PMI fell slightly in April to 58.2 from 58.3 in March, while services PMI registered a more abrupt fall to 54.7 from 55.6.
Risk Appetite Review
- The broad market (SPY ) had the best returns this week, advancing 1.42%. The results of the French elections boosted optimism across the globe, as did the bold tax overhaul plan announced by the Trump administration.
- High Beta (SPHB ) was the worst performer this week, rising only 0.78%.
- Check out our European Equities section to see a complete list of ETFs.
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Major Index Review
- Global equities have rallied again this week.
- iShares MSCI EAFE Index Fund (EFA ) jumped an impressive 3.13%, benefiting from gains staged by its European holdings as investors cheered the results of the French ballot.
- The S&P 500 (SPY ) was the worst performer, creeping up just 1.42%.
- For the rolling month, iShares Russell 2000 Index (IWM ) was the king with gains of 4.97%. The index has benefited from the return of the reflation trade and the Trump administration’s proposed tax plan.
- Emerging markets (EEM ) was the worst monthly performer, just as last week, tepidly rising 0.83%.
- To see how these indices performed last week, check out ETF Scorecard: April 21 Edition.
Foreign Equity Review
- Foreign equities were all up this week.
- Satisfied with the fact that another populism wave in Europe had been choked off, investors piled into German equities (EWG ). EWG was the best performer this week with an advance of 4.77%.
- Brazil (EWZ ) again was the worst performer for the week, rising just 0.66%, as emerging markets were broadly shunned by investors.
- India (EPI ) was the best performer for the rolling month, jumping 4.24%.
- China (FXI ), meanwhile, disappointed for the rolling month, dropping 1.15%. The fall was largely due to a credit crackdown by the Chinese government, which resorted to the move in order to avoid another steep decline in equity prices similar to the one experienced in August 2015.
- To find out more about ETFs exposed to particular countries, check our ETF Country Exposure tool. Select a particular country from a world map and get a list of all ETFs tracking your pick.
- Commodities posted mixed performance.
- Copper (JJC ) was the best performer for the week, advancing 1.98%. The rebound was due to expectations of higher demand in the period ahead, particularly from China.
- Silver (SLV ) declined 3.54% this week, as investors piled into equities and other riskier assets following the French elections. Silver is also the worst performer for the rolling month, down 4.83%.
- Oil (USO ) continued its downward trajectory this week, but crude is the best performer for the rolling month with a gain of 1.29%.
- Currencies posted mixed results.
- Unsurprisingly, the euro (FXE ) was the best performer this week, rising 1.61% as fears of a European Union collapse abated for a while. Polls indicate the pro-EU candidate, Macron, is poised for a landslide victory in the second round of French elections.
- The Japanese yen (FXY ) reversed some of the gains this week on broad optimism in the global markets spurred by the outcome of the French ballot. (FXY ) has fallen 1.86% since last Thursday.
- The British pound (FXB ) has rallied the most for the rolling month, climbing up 2.79%.
- The Australian dollar (FXA ) was the worst performer, declining 2.08%.
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Disclosure: No positions at time of writing.