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ETF News And Commentary

American stocks faced another rough session during Thursday trading as a lack of action from the ECB kept a gloomy outlook over the market. European Central Bank President Mario Draghi failed to crush brewing worries over issues in the European debt market and did not announce any new measures, leaving many investors disappointed in Thursday trading.

Thanks to this lack of ECB action, broad European markets slumped heavily on the day, with Italian and Spanish markets leading the way on the downside. Meanwhile, in the U.S., all the major benchmarks were lower, although only modestly so with the Dow and S&P 500 falling by about 0.7% and the Nasdaq slumping by 0.4%

In terms of sector performances, basic materials and financials were the biggest losers, with key companies in both of these segments falling heavily on the day. Services, health care, and utilities held up better than most, while tech delivered another mixed performance.

Currency markets did favor the greenback on the day, with the biggest moves coming against the euro and the yen. However, this paled in comparison to the bond market, as American and German 10-year securities both saw yields fall, while Italy and Spain both experienced a 38 basis point increase in their respective benchmark securities (see Three Currency ETFs Outperforming the Dollar).

Given this broad risk off trade, many commodities were under pressure during Thursday trading. Natural gas was the biggest loser, slumping by over 8% thanks to a weak storage report while metals, and most of the softs followed natural gas lower for the day.

In ETF trading, volume was relatively in line with historic averages, as modest trading was seen I a number of broad index ETFs as well as in the commodity and foreign market spaces. Light trading, however, did impact some products in the leveraged space, broad commodity funds, and a few of the U.S. sector products as well (read Escape Low Yields with These Three ETFs).

For one fund that saw outsized volume, investors can look to the WisdomTree Drefyus Brazilian Real ETF (BZF - ETF report). This product usually sees about 42,000 shares in a normal session but saw over 315,000 change hands during Thursday trading.

Interestingly, the vast majority of the volume was concentrated in the final 90 minutes of the session, as BZF didn’t even trade during at least an hour of the morning period. Still, BZF finished the day down roughly 0.3% although the currency ETF did lose another 1.8% after-hours (read The Comprehensive Guide to Brazil ETFs).

This is somewhat surprising as some of the more popular Brazil stock ETFs saw extremely light volume days suggesting that many are looking to the real to play the increasingly troubled Brazilian economy instead.

(Currently, BZF has a Zacks ETF Rank of 5 or ‘Strong Sell’)

Another segment which saw a great deal of volume during today’s session was in the Chinese market, specifically in the case of the Guggenheim China Technology Fund (CQQQ - ETF report). This product usually does less than 6,000 shares of volume in a normal day but experienced just over 83,000 shares in activity during today’s trading (see Forget FXI: Try These Three China ETFs Instead).

This huge spike in volume wasn’t exactly positive in the product as CQQQ lost just under 1.8% on the day, although it should be noted that other Chinese ETFs also finished the Thursday lower as well. However, CQQQ was definitely one of the biggest losers on the day and could see more trouble if the Chinese economy continues to appear weak in the coming months.

(see more in the Zacks ETF Center)

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