ETF Trading Report: Brazil, Consumer ETFs In Focus

Markets rose in Tuesday trading as hopes for Federal Reserve intervention continued to drive stocks. Additionally, market participants boosted their purchases thanks to positive reports out of Europe and strong U.S. housing data which showed that housing permits beat consensus estimates and continued the trend higher.

Thanks to this, major indexes were higher across the board with the Dow gaining 0.75% while the S&P 500 and the Nasdaq added, respectively, 1% and 1.2% in Tuesday trading. Strong performances were seen in much of the basic materials market, while health care, financials, and conglomerates also gained. On the downside, investors saw telecoms and staples slump along with utilities.

Bond and currency markets continued to tilt away from America as the U.S. dollar index fell by about 0.50, thanks to weakness against the euro. Meanwhile, most short-term bonds were flat but investors did see weakness in the middle and long parts of the curve as the 10 year note saw yields rise to the 1.62% mark.

Commodity markets, on the other hand, were more positive, spurred by the weakened dollar and strong performances in the agricultural market. While energy and metals were mixed, every major agricultural product gained on the day, led by a 6.4% move higher in orange juice, and then 4.8% moves in coffee and corn (read USCF Debuts New Metals ETF).

For ETF trading, investors saw light volume in many of the market’s biggest equity products while a number of sector and leveraged sector funds also saw light activity as well. On the other hand, currency funds, international sector products, and country specific ETFs did see a greater level of interest than many of their counterparts heading into mid-week trading.

In particular, investors saw a spike in interest for the Consumer Staples Select Sector SPDR ( XLP - ETF report ) . This product usually sees volume of about 5.4 million shares, but saw a surge to just under 14 million during Tuesday trading (see The Comprehensive Guide To Consumer Staples ETFs).

OptionMONSTER also noted that the product also saw a huge amount of interest from an options perspective as well. The firm said that a trader sold about 25,000 January puts, betting that XLP would hold up above $32 until then (its current price is around $34.39).

Clearly, the product which has double-digit exposure to firms like PG, KO, and PM, is becoming an even more popular tool for investors as the economic environment remains uncertain and these securities hold up better than most.

Another fund that saw a big bump in volume was the iShares MSCI Brazil Index Fund ( EWZ - ETF report ) . The ETF usually trades about 16 million shares in a normal session but spiked to just over 28 million in Tuesday’s session (see our free ETF Report on EWZ).

Interestingly, investors didn’t see the same bump in other Brazil ETFs which are more spread out among their assets like BRF, and instead focused on EWZ and other commodity intensive funds. This product puts more than one-third of its assets in basic materials and energy so today’s move higher in these commodities was a big boost for some of Brazil’s main exports and helped EWZ to jump more than 3.65% on the day.

(see more in the Zacks ETF Center)