ETF Trading Report: Regional, Spanish ETFs In Focus

U.S. stock markets again finished the day in the red as more European woes plagued the markets. Today, the focus was on Spain and its troubled banking sector as there were rumors of a bank nationalization in the country. This factor helped to push Spanish 10 Year Government bonds up above the key 6% yield mark, moving shares lower on both sides of the Atlantic in the process.

Overall, the Nasdaq slumped by about 0.4% on the day while the Dow and S&P 500 both retreated by about 0.7% in comparison. Losses were pretty bad throughout, with consumers, materials, and financials leading the way on the downside. However, some strength was seen in a few big tech names, retail staples, and utilities in Wednesday trading.

Thanks to this weakness, the dollar was a popular safe haven investment in the session, as the U.S. dollar index rose above the $80 mark as the euro fell below the $1.30 level to close the day. Despite this, Treasury bonds didn’t see a huge move in the session, as most levels of the curve saw rates that were unchanged from the previous trading day (read Real Estate ETFs: Unexpected Safe Haven).

Still, commodity markets were weak in Wednesday trading although most energy products continued to rally. Softs were mixed with many products adding marginally, although wheat and corn dragged down the space with 2.5% losses each. Beyond these corners, metals were weak as gold fell below the $1,600/oz. mark, finishing the day below $1,590 per ounce.

In ETF trading, volume was again heavy across the board, as all of the major products saw more shares change hands than normal. Once again, commodity and foreign markets experienced solid days, with those most impacted by the euro zone crisis staying in the limelight in Wednesday’s session.

In particular, it was another heavy volume day for the iShares MSCI Spain Index Fund ( EWP - ETF report ) as the country’s troubled economy was again in focus. The product usually sees volume of about 216,000 shares a day but saw a spike just over the one million share market for Wednesday’s session (read Pain In The Spain ETF Continues).

In terms of volume dispersion, the vast majority of trading came within the first hour, including two 75,000+ blocks in the first half hour. Clearly, the fund was in focus after the nationalization plan for one of the country’s banks and ongoing speculation regarding the fiscal health of the country. Additionally, the 4% move to the downside also ensured that the product would be a heavy trader during Wednesday’s session.

Another ETF that saw a massive volume spike was the RevenueShares ADR Fund ( RTR - ETF report ) which is usually not in focus due to its low market cap of $37 million. Nevertheless, the product saw a nearly tenfold increase in volume during Wednesday trading with more than 43,000 shares changing hands during the session.

The product declined by about 0.7% on the day and was likely in focus due to both its sector breakdown, and the fund’s regional exposure. The product puts 20% in financials, and 36% in energy, two sectors that were especially impacted by today’s events (see Are Investors Abandoning Brazil ETFs?).

Beyond this, the product is also heavily tilted towards Europe as more than half of the portfolio goes to the troubled region. Overall, two of the top four countries represented are European ones, while 6 of the top ten come from the area. Clearly, this heavy European exposure was also another reason for why this product saw a surge in interest during Wednesday’s session.

(see more on ETF trading at the Zacks ETF Center)