The glow from yesterday’s Fed minutes appears to have been short-lived as equities again slumped in Thursday trading. Hopes over more stimulus fell in today’s session, as James Bullard, president of the St. Louis Fed, said that data has been somewhat better in the U.S. since the last meeting, suggesting that wind could be coming out of QE3’s sails.
Thanks to this, American equities finished the day broadly lower, as the Nasdaq led with just a 0.7% loss while the S&P 500 fell by about 0.8% and the Dow slumped by 0.9% on the day. Losses were pretty widespread throughout the market sectors, although there was more pressure in the basic materials, consumer staples, industrial goods, and banking segments. Seemingly the only winners came in a few of the health care stocks and a handful of large cap tech and telecom names (read Is ROOF A Better Real Estate ETF?).
Still, despite the dashed hopes for more easing, the U.S. ten year did slide another two basis points while investors saw yields on the similar German note fall by nearly ten basis points, putting the yields on these two benchmarks at, respectively, 1.67% and 1.38%. However, it should be noted that the dollar did slump modestly on the day, although it held up well against the resource currencies but was dragged down by its performance against the euro.
Yet even with this gloom, investors did see some strength in a few commodity markets in Thursday’s session, led by strong moves in the livestock and metals markets as silver gained over 3% on the session. On the losing side, agricultural products once again saw weakness as the grains broadly slumped including 2.4% losses for wheat and corn (also read Don’t Forget about These Impressive Muni Bond ETFs).
In ETF trading, volume levels fell back slightly from yesterday’s elevated levels, although it was still far better than what investors had been seeing for most of August. The outsized volume on the day was pretty much entirely carried by the commodity ETF market, as most of the other major products either saw flat, or lower than average trading days during Thursday.
Particularly, investors saw solid interest in the ETF Securities Physical Palladium Shares (PALL - ETF report) during today’s trading. The fund usually does about 61,000 shares in a normal day but saw more than 325,000 shares change hands in Thursday trading (see Will the Palladium ETF Shine Bright This Year?).
The product probably saw such outsized volume thanks to its incredible run over the past few days as the ETF has added nearly 12.2% in the past five days. This includes a nearly 3.6% move today as worries continue to build over the South African mining situation.
Major protests have begun to spread to other mines in the region and there is some concern over more unrest in the volatile country. The world’s top platinum miner said that, according to the Washington Post, a group of workers have made their own demands beyond unions, suggesting that the crisis could still have some room to run, making platinum and palladium products to watch in the coming days as well.
Another fund which saw a great deal of activity was the Market Vectors Vietnam ETF (VNM - ETF report). The product usually does just over 100,000 shares in a normal day but saw more than half a million shares move hands in Thursday’s session (read Frontier Market ETF Investing 101).
The product lost nearly 6.3% on the session, bucking the relatively solid trend that investors had been seeing in many of the other Southeast Asia ETFs. There is some political risk in the country after one of the nation’s top businessmen was arrested, while worries are also growing that Vietnam could be headed for a hard landing as well.
Thanks to this speculation, and the general risk off attitude in the marketplace, investors have been staying away from the Vietnam ETF and could continue to do so in favor of other markets in the region over the next few weeks if these issues remain in play.
(see more in the Zacks ETF Center)