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Wall Street saw mixed trading last week. The S&P 500 (down 0.2%), the Dow Jones (up 0.9%), the Nasdaq Composite (down 1.9%) and the Russell 2000 (down 0.1%) gained/lost in a moderate range. While rising rate concerns were rife, upbeat economic indicators provided some support to the market.
Americans have been regaining confidence in the U.S. economy. This is especially true as consumer confidence bounced back in December, reversing consecutive declines in October and November to reach its highest level since April.
Plus, U.S. inflation data showed signs of cooling, yet perhaps not substantial enough for the Federal Reserve to slow down their rate-hike path. U.S. consumer spending, which accounts for more than two-thirds of U.S. economic activity, nudged up 0.1% in November after gaining 0.4% in October, while inflation cooled further.
Meanwhile, the Federal Reserve, the European Central Bank and the Bank of Japan all sounded hawkish last week. The ECB raised interest rates by 50 bps during its last monetary policy meeting of 2022, marking a fourth-rate increase, following two consecutive 75bps hikes. ECB might also raise interest rates at the current pace for a while. Bank of Japan (BoJ) also unexpectedly tweaked its bond yield control policy — a move that will allow long-term interest rates to rise more (read: ETFs to Play BoJ’s Surprise Policy Shift).
Against this backdrop, below, we highlight a few inverse/leveraged ETFs that won last week.
ETFs in Focus
Inverse Natural Gas
Ultrashort Bloomberg Natural Gas ETF (KOLD) – Up 49.9%
The U.S. Energy Information Administration, or EIA, reported that utilities across America drew 87 billion cubic feet, or bcf, from natural gas storage for the week ending Dec 16 versus market expectations for a draw of 93 bcf.
A polar blast will sweep across the United States but not fast enough to send natural gas prices northward. As a result, the natural gas market suffered due to disappointing data on heating demand. European gas market also suffered due to mild weather and huge supplies.
Leveraged Brazil
Ultra MSCI Brazil Capped ETF (UBR - Free Report) – Up 19.7%
Brazil Bull 3X Direxion (BRZU) – Up 16.6%
Brazil’s rallied last week, helped by banks and energy companies as investors welcomed cooler-than-expected mid-month inflation data.This raised hopes that the Selic rate could be cut in 2023 despite the sharp increase in public spending for the upcoming government.Brazil’s key equity gauge the Ibovespa logged the best week in over two months, per tradingeconomics.
Leveraged Nike
Axs 2X Nike Bull Daily ETF – Up 18.2%
Shares of Nike (NKE) surged last week after the apparel giant reported better-than-feared quarterly results. Its second-quarter earnings and revenues for fiscal 2023 crushed consensus estimates. Nike also provided an upbeat outlook after successfully reducing its swollen inventory.
In second-quarter fiscal 2023, the company’s earnings per share of 85 cents rose 2% from 83 cents reported in the year-ago quarter. Earnings per share beat the Zacks Consensus Estimate of 65 cents and our estimate of 68 cents. Revenues of the Swoosh brand owner grew 17% year over year to $13.32 billion million and surpassed the Zacks Consensus Estimate of $12.61 billion and our estimate of $12.55 billion.
Inverse U.S. Treasury
20+ Year Trsy Bear 3X Direxion (TMV - Free Report) – Up 15.1%
Ultrapro Short 20 Year Treasury ETF (TTT) – Up 14.7%
U.S. Treasury yields jumped last week. The benchmark U.S. treasury yield started the week at 3.57% while it ended the week at 3.75%. This has lowered the prices of U.S. treasuries and benefited the inverse-leveraged ones of that kind.
Leveraged Energy
Direxion Daily Oil Services Bull 2X Shares – Up 13.1%
Oil prices gained last week due to tighter supply bets as Russia is reportedly considering output cuts. Russia said it might cut oil production to offset price caps on Russian crude imposed by the G7 nations and the European Union, as quoted on investing.com. Russia may slash its oil output by 500,000-700,000 barrels a day in early 2023, Deputy Prime Minister Alexander Novak reportedly said in a media interview on Friday, the investing.com article noted. As a result, oil-related investments gained in prices.
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Best Inverse/Leveraged ETF Areas of Last Week
Wall Street saw mixed trading last week. The S&P 500 (down 0.2%), the Dow Jones (up 0.9%), the Nasdaq Composite (down 1.9%) and the Russell 2000 (down 0.1%) gained/lost in a moderate range. While rising rate concerns were rife, upbeat economic indicators provided some support to the market.
Americans have been regaining confidence in the U.S. economy. This is especially true as consumer confidence bounced back in December, reversing consecutive declines in October and November to reach its highest level since April.
Plus, U.S. inflation data showed signs of cooling, yet perhaps not substantial enough for the Federal Reserve to slow down their rate-hike path. U.S. consumer spending, which accounts for more than two-thirds of U.S. economic activity, nudged up 0.1% in November after gaining 0.4% in October, while inflation cooled further.
Meanwhile, the Federal Reserve, the European Central Bank and the Bank of Japan all sounded hawkish last week. The ECB raised interest rates by 50 bps during its last monetary policy meeting of 2022, marking a fourth-rate increase, following two consecutive 75bps hikes. ECB might also raise interest rates at the current pace for a while. Bank of Japan (BoJ) also unexpectedly tweaked its bond yield control policy — a move that will allow long-term interest rates to rise more (read: ETFs to Play BoJ’s Surprise Policy Shift).
Against this backdrop, below, we highlight a few inverse/leveraged ETFs that won last week.
ETFs in Focus
Inverse Natural Gas
Ultrashort Bloomberg Natural Gas ETF (KOLD) – Up 49.9%
The U.S. Energy Information Administration, or EIA, reported that utilities across America drew 87 billion cubic feet, or bcf, from natural gas storage for the week ending Dec 16 versus market expectations for a draw of 93 bcf.
A polar blast will sweep across the United States but not fast enough to send natural gas prices northward. As a result, the natural gas market suffered due to disappointing data on heating demand. European gas market also suffered due to mild weather and huge supplies.
Leveraged Brazil
Ultra MSCI Brazil Capped ETF (UBR - Free Report) – Up 19.7%
Brazil Bull 3X Direxion (BRZU) – Up 16.6%
Brazil’s rallied last week, helped by banks and energy companies as investors welcomed cooler-than-expected mid-month inflation data.This raised hopes that the Selic rate could be cut in 2023 despite the sharp increase in public spending for the upcoming government.Brazil’s key equity gauge the Ibovespa logged the best week in over two months, per tradingeconomics.
Leveraged Nike
Axs 2X Nike Bull Daily ETF – Up 18.2%
Shares of Nike (NKE) surged last week after the apparel giant reported better-than-feared quarterly results. Its second-quarter earnings and revenues for fiscal 2023 crushed consensus estimates. Nike also provided an upbeat outlook after successfully reducing its swollen inventory.
In second-quarter fiscal 2023, the company’s earnings per share of 85 cents rose 2% from 83 cents reported in the year-ago quarter. Earnings per share beat the Zacks Consensus Estimate of 65 cents and our estimate of 68 cents. Revenues of the Swoosh brand owner grew 17% year over year to $13.32 billion million and surpassed the Zacks Consensus Estimate of $12.61 billion and our estimate of $12.55 billion.
Inverse U.S. Treasury
20+ Year Trsy Bear 3X Direxion (TMV - Free Report) – Up 15.1%
Ultrapro Short 20 Year Treasury ETF (TTT) – Up 14.7%
U.S. Treasury yields jumped last week. The benchmark U.S. treasury yield started the week at 3.57% while it ended the week at 3.75%. This has lowered the prices of U.S. treasuries and benefited the inverse-leveraged ones of that kind.
Leveraged Energy
Direxion Daily Oil Services Bull 2X Shares – Up 13.1%
Oil prices gained last week due to tighter supply bets as Russia is reportedly considering output cuts. Russia said it might cut oil production to offset price caps on Russian crude imposed by the G7 nations and the European Union, as quoted on investing.com. Russia may slash its oil output by 500,000-700,000 barrels a day in early 2023, Deputy Prime Minister Alexander Novak reportedly said in a media interview on Friday, the investing.com article noted. As a result, oil-related investments gained in prices.