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.
- Despite some weak data of late, the U.S. Federal Reserve increased interest rates this week to 1.25% from 1% previously, citing continuous improvement in the labor market. The hike had been widely anticipated and failed to surprise markets. The central bank also said it would start unwinding its huge balance sheet later this year.
- The surprise on the monetary front came from Britain, where the Bank of England was very close to raising rates despite a floundering economy. Members of the monetary policy committee voted to keep rates on hold by a vote of 5 to 3, with all of them agreeing that the inflation rate has been running above the bank’s target. The sentiment overall, however, was that a weak economy would keep a lid on prices.
- Finally, the Bank of Japan decided to keep interest rates steady at 0.1%, and pledged to leave its 80-trillion-yen asset-purchase-program intact. The bank sounded upbeat on the economy and raised its GDP growth forecast from 1.5% to 1.6% for the fiscal year 2018.
- U.K.’s manufacturing production grew by 0.2% in April, considerably lower than expectations of 0.8%. The small gain comes after the metric dropped by 0.6% in the previous month.
- The U.K. Consumer Price Index rose to 2.9% year-over-year in May, as the country battles with uncertainty stemming from Brexit.
- The U.S. Consumer Price Index, meanwhile, is continuing to slide downward. In May, U.S. inflation fell by 0.1% compared to the previous month, and year-over-year CPI is now slightly below the Federal Reserve’s target, at 1.9%. Analysts had forecasted annual inflation to come in at 2%.
- U.S. retail sales plunged abruptly by 0.3% in May, raising worries about a potential overall economic weakness.
- U.S. crude oil inventories declined by 1.7 million barrels for the week ended June 9, but investors were more focused on the level of gasoline stocks, which may predict the evolution of crude supply. Gasoline stockpiles rose 2.1 million barrels in the June 9 week.
- The U.S. job market continues to be strong. Unemployment claims for the week ended June 10 stood at 237,000, beating analysts’ expectations of 243,000.
Risk Appetite Review
- The broad market (SPY ) was slightly down this week, as the Federal Reserve raised interest rates by another quarter-percentage point. With a drop of 0.13%, (SPY ) was the worst performer of the week.
- On the other side of the spectrum, low volatility (SPLV ) posted impressive gains, advancing 1.13%.
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Major Index Review
- Global equities were mostly down this week.
- The Dow Jones (DIA ) was the only asset that gained since last Thursday, as investors flocked to blue-chip companies in light of rising interest rates. (DIA ) has jumped 0.73%, and is also the best performer for the rolling month with a rise of 1.60%.
- The technology sector (QQQ ) shockingly disappointed, tumbling 3.20%. (QQQ )’s year-to-date performance remains strong, but investors are questioning whether the reversal has long legs. (QQQ ) has been amongst the best performers this year, and a correction may be welcome with investors taking some money off the table.
- Emerging markets (EEM ) dropped the most for the rolling month, down 1.11% on low oil prices and a political scandal in Brazil.
- To see how these indices performed last week, check out ETF Scorecard: June 9 Edition.
- The real estate sector (XLRE ) posted the best performance this week, gaining 2.35%. As a sector paying high dividends, the REITs were in demand along with utilities (XLU ), which also pay stable dividends.
- (XLU ) is the best monthly performer with a rise of 4.68%.
- The technology stocks broadly disappointed, with (XLK ) dropping 3.39%.
- For the rolling month, the energy sector (XLE ) fell the most, by -4.27%.
Foreign Equity Review
- Foreign equities were all down.
- Japan (EWJ ) was the best performer, slightly falling by 0.28%. The small loss erased some of the monthly gains, but (EWJ ) remained the best performer for the past 30 days, up 2.58%.
- Russia (RSX ) has lost 3.55% over the past week, representing the biggest decline from the pack. The nation’s equities have been hit by falling oil prices and no sign of sanctions relief.
- For the rolling month, Brazil (EWZ ) has tumbled 15.88%. Low oil prices contributed a bit to the poor performance, but Brazil has been lagging due to a persistent political crisis involving President Michel Temer.
- 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 were almost all down.
- Natural gas (UNG ) was the only gainer, advancing 0.15% since last Thursday, but the commodity’s monthly performance remains among the worst due to a persistent supply glut.
- Gold (GLD ) is the best performer for the rolling month, up 1.59%.
- Copper (JJC ), the worst weekly performer, has dropped 2.80% since last Thursday largely due to a hawkish Fed and a stronger dollar.
- For the rolling month, crude oil (USO ) posted a staggering loss of 10.18%. Oil traders are growing increasingly skeptical that the Organization of Petroleum Exporting Countries would be able to clear a persistent supply glut.
- Currencies posted mixed results.
- The Australian dollar (FXA ) was again the best performer this week, advancing 0.81%.
- The Japanese yen (FXY ) was the king for the rolling month, surging 2.35%.
- Europe’s single currency (FXE ) is again the worst performer for the week, although it fell just 0.27%.
- The British pound’s (FXB ) fall after the disastrous election result made the currency the worst monthly performer, down 1.11%.
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Disclosure: No positions at time of writing.