ETF Trading Report: Spain, Oil ETFs In Focus

American markets surged to end the quarter as hopes for progress in Europe sparked the bulls in Friday trading. European leaders agreed in principle to come up with measures that will stabilize Spanish and Italian bond markets via the European Stability Mechanism.

Many investors viewed this as a big step towards a more integrated Europe and one that could also help the trillion dollar economies from experiencing a Greek-like run on their bonds. Thanks to this, the Dow jumped by 2.2% while the S&P 500 added 2.5% and the Nasdaq surged by 3% to close out the week.

Unsurprisingly given these index performances, most stocks were up significantly in Friday trading. Banks, tech, and basic materials were among the biggest winners, while health care plans, utilities, and telecom were underperformers on the session (see The Guide to the 25 Most Liquid ETFs).

The euro report also had a huge impact on the currency market as the dollar index fell by about $1.00 and the euro currency itself added more than two cents against the greenback in Friday trading. Investors saw similar strength in the pound, helping to push investors out of government bonds in the process, sending 10 Year yields up to 1.66%.

With this broad risk on trade, commodities were star performers in Friday’s session, led by a 5% jump in copper, a 4.4% move higher in silver, and whopping 9.2% surge in WTI crude oil. Pretty much all the rest of the softs were up as well, with only rough rice slipping into the red in the final day of the quarter.

Thanks in part to the big moves in many sectors of the market, ETF trading was relatively robust, especially considering the low trading levels that we have been seeing as of late. In particular, ETF investors saw strong volume levels in commodity ETFs while a few international products also experienced a great deal of interest as well.

One fund that was definitely in focus to finish the quarter was the United States Oil ETF (USO - ETF report). This product usually trades about 7.9 million shares a day but spiked to just over 20.5 million shares today thanks to the renewed interest in the commodity after today’s European summit (read When Do You Buy Oil?).

Clearly, investors in the oil market believe that something to spur demand has been reached in Europe, pushing traders back into the commodity and boosting USO by 7.9% in the session. Trading volume was relatively well spread out during the day and the surge was also probably the result of some bargain buying as USO was down roughly 25% over the quarter before today’s impressive move higher.

Another product that was a big mover on the day was the iShares MSCI Spain Index Fund (EWP - ETF report). The product usually sees volume of about 756,000 shares but saw a spike to just over two million during today’s trading session (see Beyond The PIIGS, Three Troubled European ETFs to Watch).

Apparently today’s promise to bail out Spanish banks from the ESM was great news for investments in the Spanish ETF as the product soared by 7.3% on the day. This isn’t that surprising as financial services in the country have been severely beaten down and account for nearly 40% of the ETF, suggesting that as they go so does this popular fund from iShares.

(see more on ETFs at the Zacks ETF Center)