Wall Street was downbeat last week, with losses seen in all major indexes. The S&P 500 (down 2.41%), the Dow Jones (down 2.14%), the Nasdaq Composite (down 2.8%) and the Russel 2000 (down 2.6%) shed gains by around 2%.
Inflation data for April was released last week. The world’s largest economy continues to struggle with the persistently-high inflation levels. Per the latest Labor Department report, the Consumer Price Index (CPI) jumped 8.3% year over year in April, surpassing the already high Dow Jones estimate of an 8.1% rise. The metric, however, compared favorably with the 8.5% rise (the maximum since December 1981) in March.
April’s U.S. inflation print strengthened expectations that the Fed will continue its aggressive rate hike. The Fed hiked the rate in March by 25 bps and in May by 50 bps (which is the highest magnitude in two decades). Markets are pricing in another 190-basis-point rate hike in 2022.
Concerns that tighter monetary policies to tame surging inflation will slow down global economic growth have in turn weighed on the risk sentiment and driven investors toward the safe-haven currency greenback.
The dollar stands at a two-decade high against the Japanese yen and a more than five-year high against the euro, after rising 13% and 8%, respectively, against the currencies this year.
SPDR Gold Shares ( GLD Quick Quote GLD - Free Report) was off 2.5% last week as gold is priced in the greenback.
Companies pointing to currency headwinds in their latest earnings reports include Coca-Cola Co, Procter & Gamble and Philip Morris International Inc. Analysts cut their overall forecast for S&P 500 second-quarter profit growth to 5.6% from 6.8% at the start of April owing to the current headwinds,
per a Reuters article.
As far as benchmark U.S. treasury yields are concerned, the week started with 3.05% yield and ended at 2.93%. Yields declined steadily in the first four days of the week to 2.84% and then spurted back to 2.93% on Friday.
This happened because investors sought bonds’ safety amid renewed recessionary concerns. And due to a decline in the long-term bond yields, financial stocks were heavily battered last week, offering a considerable rise to the inverse financial ETFs.
Against this backdrop, below we highlight a few winning ETFs of last week.
ETFs in Focus Teucrium Wheat ( WEAT Quick Quote WEAT - Free Report) – Up 5.8%
The underlying WHEAT FUTURES looks to reflect the daily changes of a weighted average of the closing prices for 3 futures contracts for wheat that are traded on the CBOT : the second-to-expire contract, the third-to-expire contract and the contract expiring in the Dec. following the expiration month of the third-to-expire contract. The expense ratio of WEAT is 1.14%.
Kraneshares Hang Seng Tech Index ETF ( KTEC Quick Quote KTEC - Free Report) – Up 4.8%
The underlying Hang Seng TECH Index captures the 30 largest companies rapidly growing technology sector in Hong Kong. The fund charges 69 bps in fees.
Simplify Risk Parity Treasury ETF ( TYA Quick Quote TYA - Free Report) – Up 4.1%
The Simplify Risk Parity Treasury ETF seeks to target the duration of the ICE 20+ Year US Treasury Index by investing in Treasuries and Treasury futures in the middle of the curve. The fund charges 15 bps in fees.
Global X MSCI China Health Care ETF ( CHIH Quick Quote CHIH - Free Report) – Up 3.9%
The underlying MSCI China Health Care 10/50 Index tracks the performance of companies in the health care sector in the MSCI China Index. The fund charges 65 bps in fees.
Kraneshares China Innovation ETF ( KGRO Quick Quote KGRO - Free Report) – Up 3.9%
The KraneShares China Innovation ETF is an active ETF which provides investors with core exposure to the brightest high-growth areas within economy of China by combining New China growth sectors. The fund charges 99 bps in fees.
US Gasoline ( UGA Quick Quote UGA - Free Report) – Up 3.9%
The underlying Gasonline Price Index looks to reflect the changes of the price of gasoline, as measured by the price of the contract on unleaded gasoline for delivery to the New York harbor, traded on the NYMEX that is the near month to expire, except when the near contract is within two weeks of expiration, in which case it will be measured by the contract that is the next month contract to expire. The expense ratio of UGA is 1.02% annually.