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The past week was all about Turkey crisis.President Trump lately tweeted that he has doubled steel and aluminum tariffs on the country. Turkey is currently facing U.S. sanctions for its arrest of U.S. pastor Andrew Brunson in 2016.
In reply, Turkish president Recep Tayyip Erdogan came up with a non-conciliatory tone against the United States. Plus, Turkey has extended its relationship with Russia and Iran; both countries’ relationship with the United States are not seamless at present. Turkish lira was massively battered to a record low. The crisis in the currency makes it pricier for Turkish borrowers to pay back foreign-currency loans (read: Currency ETFs Winners & Losers on Turkey Crisis).
The issue had a spiraling effect on the global market with emerging market (EM) currencies following the course of the lira’s downward spiral. There was lack of confidence in EM assets. The MSCI Emerging Market Currency Index nosedived to its lowest in more than a year. Overall global markets went into a tailspin. Investors sought safety to U.S. safe haven sectors (read: Most-Hurt EM ETFs on Turkey Upheaval).
However, all was not bad last week. So far, the year was overpowered by U.S.-China trade tensions. But then there was news that the United States and China are ready to restart trade talks or negotiations next week to prevent a full-blown trade war. So, “the first such meeting since July. It helped recover many spaces that were hurt by an acute trade war fear (read: 5 Sector ETFs Most Exposed to Trade Tensions).”
Against this backdrop, let’s take a look which sector ETFs topped and the ones that flopped last week.
Though the sector underperforms in a rising rate environment, investors favored the space past week. This shows investors inclination for safe and high-yielding sectors. After all, an improving U.S. economy should bode well for real estates. iShares Residential Real Estate Capped ETF (REZ - Free Report) andInvesco KBW Premium Yield Eq REIT ETF (KBWY - Free Report) added more than 3% in the past week. KBWY yields 6.59% while REZ yields 3.38% annually.
Gold price is on a downhill ride thanks to a stronger dollar. As a result, gold mining stocks and ETFs too lost luster. Sprott Gold Miners ETF (SGDM - Free Report) , VanEck Vectors Junior Gold Miners ETF (GDXJ - Free Report) and ALPS Sprott Junior Gold Miners ETF (SGDJ - Free Report) all lost about 7% past week (as of Aug 17, 2018).
China Healthcare
Chinese stocks touched about a two-year low on Aug 17 as healthcare shares slumped after the sacking of officials over a vaccine scandal in the country, per Financial Times. Regulators noted last month that “vaccine maker Changsheng Biotech had forged data during the production of 110,000 rabies vaccines and sold more than 250,000 substandard vaccines against other diseases.” Overall KraneShares MSCI All China Health Care ETF (KURE - Free Report) shed about 4.5% past week.
Copper Miners
Among several commodities that fell prey to U.S.-China trade tensions, copper seems to deserve a mention. Copper futures for September delivery dropped to as low as $2.552 per pound, marking their lowest level since June 2017. Almost six-month-long trade war talks between the United States and China and a strong dollar weighed on the metal. According to experts, copper's decline means a looming surge in volatility in risk assets like equities, as quoted on CNBC. Global X Copper Miners ETF (COPX - Free Report) lost about 4.5%.
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Top and FLOP ETFs of Last Week
The past week was all about Turkey crisis.President Trump lately tweeted that he has doubled steel and aluminum tariffs on the country. Turkey is currently facing U.S. sanctions for its arrest of U.S. pastor Andrew Brunson in 2016.
In reply, Turkish president Recep Tayyip Erdogan came up with a non-conciliatory tone against the United States. Plus, Turkey has extended its relationship with Russia and Iran; both countries’ relationship with the United States are not seamless at present. Turkish lira was massively battered to a record low. The crisis in the currency makes it pricier for Turkish borrowers to pay back foreign-currency loans (read: Currency ETFs Winners & Losers on Turkey Crisis).
The issue had a spiraling effect on the global market with emerging market (EM) currencies following the course of the lira’s downward spiral. There was lack of confidence in EM assets. The MSCI Emerging Market Currency Index nosedived to its lowest in more than a year. Overall global markets went into a tailspin. Investors sought safety to U.S. safe haven sectors (read: Most-Hurt EM ETFs on Turkey Upheaval).
However, all was not bad last week. So far, the year was overpowered by U.S.-China trade tensions. But then there was news that the United States and China are ready to restart trade talks or negotiations next week to prevent a full-blown trade war. So, “the first such meeting since July. It helped recover many spaces that were hurt by an acute trade war fear (read: 5 Sector ETFs Most Exposed to Trade Tensions).”
Against this backdrop, let’s take a look which sector ETFs topped and the ones that flopped last week.
Winners
Consumer Staples
Trade tensions and Turkey crisis boosted this non-cyclical consumer sectors. First Trust Consumer Staples AlphaDEX ETF (FXG - Free Report) and Consumer Staples Select Sector SPDR ETF (XLP - Free Report) advanced more than 3% in the week (read: Wal-Mart Blockbuster Q2 Earnings Pushes Consumer ETFs Higher).
Real Estate
Though the sector underperforms in a rising rate environment, investors favored the space past week. This shows investors inclination for safe and high-yielding sectors. After all, an improving U.S. economy should bode well for real estates. iShares Residential Real Estate Capped ETF (REZ - Free Report) andInvesco KBW Premium Yield Eq REIT ETF (KBWY - Free Report) added more than 3% in the past week. KBWY yields 6.59% while REZ yields 3.38% annually.
Soybean
News of a conciliatory summit between the United States and China pushed soybean prices higher lately. This will be the first meeting of its kind since July. Teucrium Soybean ETF (SOYB - Free Report) added about 2.9%(read: US Farm Belt at Risk on China Tariffs: ETFs in Focus).
Losers
Gold Miners
Gold price is on a downhill ride thanks to a stronger dollar. As a result, gold mining stocks and ETFs too lost luster. Sprott Gold Miners ETF (SGDM - Free Report) , VanEck Vectors Junior Gold Miners ETF (GDXJ - Free Report) and ALPS Sprott Junior Gold Miners ETF (SGDJ - Free Report) all lost about 7% past week (as of Aug 17, 2018).
China Healthcare
Chinese stocks touched about a two-year low on Aug 17 as healthcare shares slumped after the sacking of officials over a vaccine scandal in the country, per Financial Times. Regulators noted last month that “vaccine maker Changsheng Biotech had forged data during the production of 110,000 rabies vaccines and sold more than 250,000 substandard vaccines against other diseases.” Overall KraneShares MSCI All China Health Care ETF (KURE - Free Report) shed about 4.5% past week.
Copper Miners
Among several commodities that fell prey to U.S.-China trade tensions, copper seems to deserve a mention. Copper futures for September delivery dropped to as low as $2.552 per pound, marking their lowest level since June 2017. Almost six-month-long trade war talks between the United States and China and a strong dollar weighed on the metal. According to experts, copper's decline means a looming surge in volatility in risk assets like equities, as quoted on CNBC. Global X Copper Miners ETF (COPX - Free Report) lost about 4.5%.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>