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.
- The global stock markets are selling off, with analysts blaming rising Treasury yields and interest rates. President Donald Trump said the Federal Reserve was culpable for the sell-off, going as far as to call the Fed policymakers “crazy.” The ten-year Treasury yields have been rising incessantly since the beginning of the month, from 3.08% on October 1 to as much as 3.23% on October 5. Now, the yields have given up some ground and sport a yield of 3.18%.
- The U.S. unemployment rate dropped from 3.9% to 3.7% in September, hitting the lowest level since December 1969. However, non-farm payrolls rose just by 134,000, below expectations of 185,000. For the prior month, the number of payrolls was revised up to 270,000. Average hourly earnings increased 2.8% from the same period last year, in line with estimates.
- U.K. manufacturing production contracted by 0.2% in August versus growth of 0.1% expected by pundits, in a further deterioration of the picture. Year-over-year, production grew by 1.3%, above forecasts of 1.1%.
- As the sell-off in equity markets deepens as a result of rising rates, inflation is stagnating, giving the Fed reasons to be optimistic the rout is temporary. The Consumer Price Index (CPI) rose 0.1% in September compared to 0.2% expected. The CPI is up 2.3% year-over-year, down from 2.7% in August. Core inflation increased 2.2% in September.
- U.S. unemployment claims came in at 214,000 for the week ended October 6, 7,000 more than expected by analysts. Still, claims are hovering around historic lows.
- Crude oil inventories advanced for the third consecutive week in the U.S. After gaining 8 million barrels in the prior week, stockpiles advanced 6 million for the seven-day period ended October 5.
Risk Appetite Review
- Markets sold off this week.
- Risk assets (SPHB ) posted the worst performance, tumbling more than 8%.
- Low volatility (SPLV ) were the best performers, with a drop of 3.8%.
- The broad market (SPY ) lost as much as 6%.
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Major Index Review
- Major indexes were all down.
- Technology equities (QQQ ) suffered the most from the negative sentiment toward equities, declining a little over 7%.
- The European and Australasian equities (EFA ) fell just 4.55%, as the sell-off was an exogenous event. (EFA ) is also the best performer for the rolling month, down just 2.87%.
- Russell 2000, the small-cap index, (IWM ) plunged nearly 10% for the rolling month, representing the worst performance.
- To see how these indices performed a week before last, check out ETF Scorecard: October 5 Edition.
- The telecom sector (XTL ) suffered the most pain, losing more than 8% for the past five days and nearly 10% for the rolling month. Given the sell-off, investors were put off by telecom companies’ high indebtedness and the upcoming capital expenditures for the 5G spectrum.
- Utilities (XLU ), acting as a safe haven, were the only gainers from the pack this week, up 0.51%.
- Thanks to gains registered in previous weeks, the energy sector (XLE ) is up slightly for the rolling month and is the best performer.
Foreign Equity Review
- Brazil (EWZ ) is again the best performer this week as it was largely insulated from the global sell-off. Investors cheered the results of the presidential elections. Far-right candidate Jair Bolsonaro is poised to win the presidency, and the market appreciated his move to appoint a respected financier to develop his economic policy. Brazil is also the best performer for the rolling month, up as much as 20.49%.
- Germany (EWG ) is the worst performer this week, as the Eurozone is facing an internal crisis after Italy signaled it would not obey budget rules. (EWG ) dropped 4.92%.
- India (EPI ) is the worst monthly performer with a drop of 13.45%.
- To find out more about ETFs exposed to particular countries, use 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 mixed.
- Unsurprisingly, gold (GLD ) was the best performer with a rise of 1.73%, as investors flew to safe-haven assets.
- Meanwhile, oil (USO ) dropped as much as 5% this week, due to faltering demand in the U.S. and rising inventory levels.
- For the rolling month, the Agricultural fund (DBA ) recorded the weakest performance, rising just 0.87%.
- Natural gas (UNG ) remains the best performer for the past 30 days by far, up nearly 16%.
- The U.S. dollar (UUP ) was the single faller this week, despite rising Treasury yields, which typically attract foreign investors to dollar-denominated assets.
- The Japanese yen (FXY ), meanwhile, benefited from its safe-haven status, surging 1.63% for the week. However, that was not enough to bring the yen’s monthly performance into positive territory. The yen is the only faller for the past 30 days, down 0.61%.
- Emerging market currencies (CEW ) are up 2.38% for the rolling month, partly bolstered by the strong performance of the Brazilian real.
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Disclosure: No positions at time of writing.