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Wall Street was downbeat in December with muted Santa Clause Rally. The S&P 500 was off 5.7%, the Dow Jones has lost 3.7%, the Nasdaq Composite has retreated about 8.7% and the Russell 2000 has fallen about 7% past month (as of Dec 30, 2022).
In fact, the month snapped two consecutive months of gains. While recession fears were triggered by the relentless market forecasts, rising COVID cases in China and the advent of a new sub-variant of Omicron Covid-19 virus also contributed to the market slump.
Meanwhile, the Federal Reserve, the European Central Bank and the Bank of Japan all sounded hawkish in December. 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. U.S. inflation data showed signs of cooling, yet perhaps not substantial enough for the Federal Reserve to slow down their rate-hike path.
The Fed hiked rates by 50 bps in December after four straight 75 bps increases. The policymakers also forecast that their key short-term rate will reach a range of 5% to 5.25% by the end of 2023, before being slashed to 4.1% in 2024. This suggests that the Fed is prepared to hike its benchmark rate by additional three-quarters of a point and then stay put till the end of 2023.
Amid this backdrop, a round of strong economic data lent some support to the stocks also. 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. Jobs data came in at upbeat too.
Against this backdrop, below, we highlight a few ETFs that won last week.
ETFs in Focus
Noble Absolute Return ETF – Up 54.3%
The Noble Absolute Return ETF seeks capital appreciation across a full market cycle. As market sentiments were unsteady in December, this defensive fund gained in prices.
Tesla shares suffered a disastrous month. Tesla lost about 37.4% in December on doubts about chief Elon Musk’s share sales and EV consumer demand. CEO Musk’s own heavy selling of Tesla shares to finance his $44-billion acquisition of Twitter as well as growing concerns about the outlook for sales of its cars wreaked havoc on the carmaker.
The underlying Capesize 5TC Index, Panamax 4TC Index & Supramax 6TC Index measure rates for shipping dry bulk freight. Though the fund underperformed in 2022 due to a decline in freight rates, it marked an improvement in December.
iPatha.B Nickel Subindex TR ETN – Up 11.4%
The iPath Bloomberg Nickel Subindex Total Return ETN provides exposure to the Bloomberg Nickel Subindex Total Return.Nickel prices rose amid tight supply and slightly improving downstream demand. In the alloy market, some factories began to restock ahead of the Chinese New Year, per metal.com.
The Borsa Istanbul 100 index continues to hit fresh record highs to trade above the 5400 level in December, as investors keep on using equities as a hedge against surging consumer prices and a plunging lira. The Central Bank of Turkey paused the rate-cut cycle and left the one-week repo rate unchanged at 9% on December 22nd, following a 1000bps cut since September of 2021, per tradingeconomics.
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Best ETFs of December
Wall Street was downbeat in December with muted Santa Clause Rally. The S&P 500 was off 5.7%, the Dow Jones has lost 3.7%, the Nasdaq Composite has retreated about 8.7% and the Russell 2000 has fallen about 7% past month (as of Dec 30, 2022).
In fact, the month snapped two consecutive months of gains. While recession fears were triggered by the relentless market forecasts, rising COVID cases in China and the advent of a new sub-variant of Omicron Covid-19 virus also contributed to the market slump.
Meanwhile, the Federal Reserve, the European Central Bank and the Bank of Japan all sounded hawkish in December. 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. U.S. inflation data showed signs of cooling, yet perhaps not substantial enough for the Federal Reserve to slow down their rate-hike path.
The Fed hiked rates by 50 bps in December after four straight 75 bps increases. The policymakers also forecast that their key short-term rate will reach a range of 5% to 5.25% by the end of 2023, before being slashed to 4.1% in 2024. This suggests that the Fed is prepared to hike its benchmark rate by additional three-quarters of a point and then stay put till the end of 2023.
Amid this backdrop, a round of strong economic data lent some support to the stocks also. 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. Jobs data came in at upbeat too.
Against this backdrop, below, we highlight a few ETFs that won last week.
ETFs in Focus
Noble Absolute Return ETF – Up 54.3%
The Noble Absolute Return ETF seeks capital appreciation across a full market cycle. As market sentiments were unsteady in December, this defensive fund gained in prices.
Axs Tesla Bear Daily ETF (TSLQ - Free Report) – Up 46.2%
Tesla shares suffered a disastrous month. Tesla lost about 37.4% in December on doubts about chief Elon Musk’s share sales and EV consumer demand. CEO Musk’s own heavy selling of Tesla shares to finance his $44-billion acquisition of Twitter as well as growing concerns about the outlook for sales of its cars wreaked havoc on the carmaker.
Breakwave Dry Bulk Shipping ETF (BDRY - Free Report) – Up 16.9%
The underlying Capesize 5TC Index, Panamax 4TC Index & Supramax 6TC Index measure rates for shipping dry bulk freight. Though the fund underperformed in 2022 due to a decline in freight rates, it marked an improvement in December.
iPatha.B Nickel Subindex TR ETN – Up 11.4%
The iPath Bloomberg Nickel Subindex Total Return ETN provides exposure to the Bloomberg Nickel Subindex Total Return.Nickel prices rose amid tight supply and slightly improving downstream demand. In the alloy market, some factories began to restock ahead of the Chinese New Year, per metal.com.
Turkey iShares MSCI ETF (TUR - Free Report) – Up 7.9%
The Borsa Istanbul 100 index continues to hit fresh record highs to trade above the 5400 level in December, as investors keep on using equities as a hedge against surging consumer prices and a plunging lira. The Central Bank of Turkey paused the rate-cut cycle and left the one-week repo rate unchanged at 9% on December 22nd, following a 1000bps cut since September of 2021, per tradingeconomics.