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Wall Street was upbeat with the S&P 500 (up 1.45%), the Dow Jones (up 1.5%), the Nasdaq (up 1.0%) and the Russell 2000 (up 1.8%) offering decent returns last week. The week started with 3.79% of the 10-year U.S. treasury yield and ended at 3.55%. The decline in the U.S. treasury yield triggered the stock market rally.
The ISM Manufacturing PMI for the United States declined to 48.4 in December of 2022, slightly below forecasts of 48.5, pointing to the second successive month of contraction in factory activity as Americans are shifting spending away from goods to services. Barring the decline in April 2020 at the peak of the covid pandemic, this marked the lowest reading since February 2016.
The United States economy added 223, 000 jobs in December of 2022, the least since December of 2020, after a downwardly revised 256, 000 rise in November, and beating market expectations of 200, 000. The U.S. unemployment rate fell to 3.5% in December 2022, falling shy of market expectations of 3.7% and matching the rates seen in September and July, which were the lowest since February 2020.
Such downbeat data points gave cues of softer U.S. rate hikes in the coming days. There are 75.7% chances of 25 bps rate hike in the next Fed meeting. Current target rate is 425 – 450 bps. Against this backdrop, below we highlight a few top-performing ETFs of the last week.
ETFs in Focus
China Real Estate
Global X MSCI China Real Estate ETF – Up 6.6%
The Global X MSCI China Real Estate ETF seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI China Real Estate 10/50 Index. Chinese real estate stocks recorded gains as economic reopening gained momentum and the outlook improved for the beleaguered property sector on the back of policy easing for the property sector.
The recently passed U.S. defense spending bill authorized $1 billion for the National Defense Stockpile to acquire strategic minerals and rare earth elements that have critical use in military and other applications. The United States is enhancing its focus on critical minerals and materials to lower its dependance on China amid intensifying tensions between the two countries.
e-Commerce
First Trust S-Network E-Commerce ETF (ISHP - Free Report) – Up 5.8%
The underlying S-Network Global E-Commerce Index provides exposure to companies with securities listed on recognized global securities exchanges that are principally engaged in the global e-commerce industry, including the online retail, online marketplace, content navigation and e-commerce infrastructure business segments.
Retail ETFs have been gaining momentum to start the New Year. Online sales during the holiday season increased 3.5% year over year to $211.7 billion, according to Adobe Analytics, as record-high discounts and promotions led shoppers to indulge on shopping, as quoted on CNBC. Online sales during Cyber Week, the five-day period from Thanksgiving to Cyber Monday, totaled about $35.3 billion (read: Online Retail ETFs Gaining Momentum: Time to Buy?).
The Dividend Performers ETF seeks current income with capital appreciation being a secondary goal. The underlying NASDAQ U.S. Broad Dividend Achievers Index comprises U.S.-accepted securities with at least 10 consecutive years of increasing annual regular dividend payments. Such an investment objective calls for quality exposure.
The underlying Capesize 5TC Index, Panamax 4TC Index & Supramax 6TC Index measure rates for shipping dry bulk freight. Though the fund underperformed in 2022 due to a decline in freight rates, it started marking an improvement from December.
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Top-Performing ETF Areas of Last Week
Wall Street was upbeat with the S&P 500 (up 1.45%), the Dow Jones (up 1.5%), the Nasdaq (up 1.0%) and the Russell 2000 (up 1.8%) offering decent returns last week. The week started with 3.79% of the 10-year U.S. treasury yield and ended at 3.55%. The decline in the U.S. treasury yield triggered the stock market rally.
The ISM Manufacturing PMI for the United States declined to 48.4 in December of 2022, slightly below forecasts of 48.5, pointing to the second successive month of contraction in factory activity as Americans are shifting spending away from goods to services. Barring the decline in April 2020 at the peak of the covid pandemic, this marked the lowest reading since February 2016.
The United States economy added 223, 000 jobs in December of 2022, the least since December of 2020, after a downwardly revised 256, 000 rise in November, and beating market expectations of 200, 000. The U.S. unemployment rate fell to 3.5% in December 2022, falling shy of market expectations of 3.7% and matching the rates seen in September and July, which were the lowest since February 2020.
Such downbeat data points gave cues of softer U.S. rate hikes in the coming days. There are 75.7% chances of 25 bps rate hike in the next Fed meeting. Current target rate is 425 – 450 bps. Against this backdrop, below we highlight a few top-performing ETFs of the last week.
ETFs in Focus
China Real Estate
Global X MSCI China Real Estate ETF – Up 6.6%
The Global X MSCI China Real Estate ETF seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI China Real Estate 10/50 Index. Chinese real estate stocks recorded gains as economic reopening gained momentum and the outlook improved for the beleaguered property sector on the back of policy easing for the property sector.
Rare Earth
Vaneck Rare Earth Strategic Metals ETF (REMX - Free Report) – Up 6%
The recently passed U.S. defense spending bill authorized $1 billion for the National Defense Stockpile to acquire strategic minerals and rare earth elements that have critical use in military and other applications. The United States is enhancing its focus on critical minerals and materials to lower its dependance on China amid intensifying tensions between the two countries.
e-Commerce
First Trust S-Network E-Commerce ETF (ISHP - Free Report) – Up 5.8%
The underlying S-Network Global E-Commerce Index provides exposure to companies with securities listed on recognized global securities exchanges that are principally engaged in the global e-commerce industry, including the online retail, online marketplace, content navigation and e-commerce infrastructure business segments.
Retail ETFs have been gaining momentum to start the New Year. Online sales during the holiday season increased 3.5% year over year to $211.7 billion, according to Adobe Analytics, as record-high discounts and promotions led shoppers to indulge on shopping, as quoted on CNBC. Online sales during Cyber Week, the five-day period from Thanksgiving to Cyber Monday, totaled about $35.3 billion (read: Online Retail ETFs Gaining Momentum: Time to Buy?).
Dividends
Listed Funds Dividend Performers ETF (IPDP - Free Report) – Up 5.7%
The Dividend Performers ETF seeks current income with capital appreciation being a secondary goal. The underlying NASDAQ U.S. Broad Dividend Achievers Index comprises U.S.-accepted securities with at least 10 consecutive years of increasing annual regular dividend payments. Such an investment objective calls for quality exposure.
Shipping
Breakwave Dry Bulk Shipping ETF (BDRY - Free Report) – Up 5.6%
The underlying Capesize 5TC Index, Panamax 4TC Index & Supramax 6TC Index measure rates for shipping dry bulk freight. Though the fund underperformed in 2022 due to a decline in freight rates, it started marking an improvement from December.