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.
- Monetary policy was a key agenda item this week, as investors dissected the official transcript of the Federal Reserve’s June policy meeting. The Fed not only raised interest rates last month, but indicated that policy normalization would continue as planned. However, the minutes also suggested that the fed was at odds over the inflation shortfall.
- The U.S. economy likely finished the second quarter on firm footing, according to a pair of PMI reports from the Institute for Supply Management (ISM). The June manufacturing gauge climbed to 57.8, the highest since 2014. Services PMI also strengthened to 57.4.
- On Wall Street, volatility crept back into the picture after Independence Day as investors assessed the geopolitical fallout of North Korea’s intercontinental ballistic missile test. U.S. President Donald Trump said he was mulling a “very severe” response to the provocation.
- The CBOE VIX, a measure of implied volatility over the next 30 days, spiked to seven-week highs on Thursday as the S&P 500 Index looked poised to end the week lower.
- On the commodities front, oil prices plunged in mid-week trading after Russia indicated it would not support further production curbs. However, prices quickly rebounded the following session after the U.S. Energy Information Administration (EIA) reported a much bigger-than-expected draw in commercial crude inventories. Stockpiles fell by 6.3 million barrels, official data showed.
- Across the Atlantic, European Central Bank (ECB) Chief Economist Peter Praet urged caution in normalizing monetary policy amid the recent pickup in economic growth and inflation. His remarks supported a further cooling trend for the euro, which surged to 14-month highs last week.
- Broad measures of Eurozone economic growth rose faster than expected in June, with the final composite PMI coming in at 56.3, according to IHS Markit.
- The Australian dollar also backtracked this week after the central bank kept interest rates unchanged. The world’s twelfth-largest economy saw retail sales grow 0.6% in May, alleviating concerns about a broad slowdown in consumer spending.
Risk Appetite Review
- Risk appetite waned this week, a trend that was largely reflected in the equity markets.
- The large-cap S&P 500 (SPY ) declined 0.71% over the past five days.
- Equal-weighted indices (RSP ) fared no better this week. The RSP performed worse than the S&P 500, falling 0.92% over the same period.
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Major Index Review
- Wall Street’s major equity indexes were down across the board, as geopolitical risks weighed on investor sentiment after the Independence Day break.
- The Nasdaq Composite Index (QQQ ) declined 1.2% and was down 4.88% over the past month.
- The iShares MSCI EAFE Index Fund (EFA ) and iShares MSCI Emerging Markets ETF (EEM ) also finished lower for the week.
- The Dow Jones Industrial Average (DIA ) bucked the downtrend by breaking even for the week.
- Most sectors finished in the red this week, with real estate (XLRE ) among the biggest decliners. The S&P 500’s most recent edition has largely underperformed the market since the presidential election.
- Telecommunications (XTL ) was the only sector to underperform real estate this week as it fell 2.3%.
- A rotation on the sector front kept technology (XLK ) on the defensive. Tech stocks were down 1.13% in the week to Thursday. To learn more about technology ETFs, click here.
- Utilities (XLU ), which are normally considered defensive plays, also declined sharply. The sector has been the worst performer over the past month, falling 5.13%.
Foreign Equity Review
- Like their U.S. counterparts, foreign equity markets were down virtually across the board. Japanese stocks (EWJ ) were the worst performers of the week, falling 1.3%.
- German shares (EWG ) were also in the doldrums, falling 0.56%.
- Indian stocks were the lone gainers this week, with the WisdomTree India Earnings Index (EPI ) adding 1.02%. Those gains helped EPI pare its monthly decline down to 1.23%.
- To explore ETFs based on country exposure, refer to our ETF Country Exposure tool. Select a country from a world map and get a list of all ETFs tracking your pick.
- With the exception of agriculture (DBA ), which added 2.87%, the past five days were overwhelmingly negative for commodities.
- U.S. Natural Gas (UNG ) plunged 4.30% during the week, expanding its monthly loss to 5.70%.
- Precious metals also took a hit this week, as a rebounding dollar weighed on prices. Silver (SLV ) plunged to fresh yearly lows in the process, while gold (GLD ) fell to its lowest level in two months.
- The major currencies finished mostly lower for the week, with the Australian dollar (FXA ) leading the decline.
- The Japanese yen (FXY ) also suffered a broad setback even as risk aversion crept back into the picture.
- On the opposite side of the spectrum, the embattled U.S. currency staged a modest recovery this week, with the PowerShares DB U.S. Dollar Index Bullish Fund (UUP ) gaining 0.16%. The dollar is slowly recovering from more than nine-month lows against a basket of other major currencies.