Last week, Wall Street continued its downtrend amid the uncertainties emanating from the Russia-Ukraine war. The S&P 500 (down 2.9%), the Dow Jones (down 2%), the Russell 2000 (down 1.1%) and the Nasdaq Composite (down 3.5%) all lost last week.
Week in a Glance
Among the major developments, there was news that the truce talks between Russia and Ukraine failed. In the meeting held last week, the European Central Bank said that it would end its bond-buying program in the third quarter if economic data support the move. Monthly net bond purchases would amount to 40 billion euros ($44.5 billion) in April, 30 billion euros in May and 20 billion euros in June (read:
ECB to End QE Sooner-Than-Expected: ETFs to Win).
President Biden has signed an executive order that would coordinate efforts among financial regulators to study the risks and opportunities associated with digital assets. Bitcoin, one of the world’s most popular cryptocurrencies, jumped 9% on Wednesday last week, having reacted to the news, according to Coin Metrics.
Meanwhile, we had another red-hot report of U.S. inflation. The CPI jumped at its fastest annual pace in 40 years in February. The datapoints were almost in line with market expectations. The consumer price index (CPI) soared 7.9% year over year in February. Excluding volatile energy and food categories, the CPI rose 6.4%. Rising commodities prices, higher demand and supply chain disruptions, and a low base effect from last year continued to raise prices.
Oil prices continued its ascent as oil-rich Russia’s involvement in the war and Western sanctions against it have flared up the possibilities that Russia could disturb its oil supplies to dependent nations. As a result, energy ETFs, both fossil-fuel and clean, gained massively last week. Meanwhile, Russia banned exports of certain commodities and raw materials, according to a decree issued Tuesday evening in Moscow, as quoted on Wall Street Journal. The ban will be in effect till Dec 31, according to the decree.
Against this backdrop, below we highlight a few ETFs that jumped last week apart from clear war winners – oil, clean energy and uranium.
ProShares Inflation Expectations ETF ( RINF Quick Quote RINF - Free Report) – Up 7.2%
Increased inflationary pressure and expectations due to the war as well as pandemic-driven supply chain issues led investors toward inflation-beating products like RINF. It tracks the FTSE 30-Year TIPS (Treasury Rate-Hedged) Index tracks the performance of long positions in the most recently issued 30-year TIPS and duration-adjusted short positions in U.S. Treasury bonds of, in aggregate, approximate equivalent duration dollars to the TIPS.
Advocate Rising Rate Hedge ETF ( RRH Quick Quote RRH - Free Report) – Up 7.2%
Rates have been rising fast in the United States over the past few weeks on growing inflation and bets over fatter-than-expected Fed rate hikes this year. Given this, investors must be interested in finding out the ways to weather a sudden jump in the benchmark bond yields and increased inflationary expectations.
RRH is such a product. The actively-managed ETF invests in a combination of: U.S. Treasury securities; forwards, futures or options on various currencies; long and short positions on the short and long-end of the Treasury or swap yield curve via futures, swaps, forwards and other over-the-counterderivatives; long and short positions on equity indexes and investment companies, including ETFs; and commodity futures and options.
Poland iShares MSCI ETF (EPOL) – Up 6.0%
The National Bank of Poland raised its benchmark reference rate by 75 bps to 3.5% on Mar 8 to its highest level since February 2013 and above expectations of a 50-bp increase. It marked the sixth successive hike of the main rate, as the National Bank of Poland looked to fight inflationary pressures. This probably helped the fund EPOL.
Direxion Low Priced Stock ETF – Up 5.5%
The underlying Solactive Two Bucks Index is an equal-weighted index, which measures the performance of U.S.-listed securities with relatively low trading prices. The Index Provider begins with the Solactive GBS United States All Cap Index and applies certain requirements that vary depending on the quarter at which the index is rebalanced to select a total of 50 securities.
Wisdomtree Germany Hedged Equity Fund ( DXGE Quick Quote DXGE - Free Report) – Up 5.4%
Since German stocks entered the bear market recently, investors probably went for bottom fishing. Bottom fishing refers to the strategy ofbuying undervalued assets in order to gain from the investment when prices normalize.