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The market was abuzz with anticipation in December 2016. Speculation was rife over the span of the Trump rally initiated in early November and over how the investing world would react to the Fed rate hike.
Also, traditional investors pinned their hopes on the Santa Claus rally in the most successful trading month of the year. This is largely because U.S. retailers are expected to log ‘the best holiday season in years’ in 2016 and consumer confidence tipped to a 15-year, giving all reasons for a great end-of-season rally.
Whatever the case, the month saw smooth trading but ended on a soft note mostly because the Dow Jones failed to hit the much-wanted 20,000 mark. Profit booking seems to be behind this retreat (read: Inside the 5 Top Performing Stocks of the Dow ETF).
Overall, three key U.S. ETFs, SPY, DOW and QQQ were up 2.4%, 4% and 1.3% in one month (as of December 29, 2016). Against this backdrop, let’s take a look which ETFs topped and which ones lost in December.
Gainers
iPath Bloomberg Natural Gas SubTR ETN
As expected, oil and energy exchanged-traded products stole the show in December following the OPEC output cut deal in late November. On November 30, OPEC decided to slash production by about 1.2 million barrels a day from January for six months. Plus, Plus, on December 10, OPEC cut the first deal with non-OPEC since 2001 to reduce output in 2017.
The news acted as a tailwind for most of the energy ETFs in December. Plus, winter heated up natural gas prices. The “below-normal temperatures over much of the country into the third week of December” and expectations of chills in January actually fired up this long-frozen commodity and sent its prices to a two-year high (read: Natural Gas ETFs Warm Up: Will the Rally Continue?).
Among other energy product gains were United States Gasoline (UGA),iPath Bloomberg Energy SubTR ETN (JJE),iPath Global Carbon ETN (GRN) and SPDR S&P Oil & Gas Equipment & Services ETF (XES).
ETFS Zacks Earnings Small-Cap US
Small-caps continued their dream run in December since Trump’s win besides some dips here and there. An improving U.S. economy, hopes of fiscal reflation and a stronger U.S. dollar bode well for small-cap stocks. This is especially true given the fact that small-cap stocks have greater domestic exposure and are thus largely unruffled by negative currency translation.
Hopes of stabilization in the Italian banking sector gave a boost to this fund. The country’s government approved as much as €20 billion (around $21 billion) for a potential rescue plan for troubled banks. Since financial stocks account for about one-third of the basket, the jump in EWI is self-explanatory (read: What Does Italy Referendum Mean for These ETFs?).
Losers
iPath Bloomberg Nickel SubTR ETN
Weaker demand andprofit-booking took a toll on nickel prices. JJN was off about 14.8% in the last one month (as of December 29, 2016).
iPath Bloomberg Coffee SubTR ETN
Surge in production of the Arabica variety of coffee in Brazil and Colombia dealt a blow to coffee prices. Crop grew 26% in the season starting from July 1 in Brazil, while the estimates for output was upgraded by 5.3% in Colombia. As a result, coffee ETNs did not fare well in the month with JO losing about 14.5% (as of December 29, 2016).
Be it Clinton or Trump, there seems to be no relief for biotech and pharma stocks as well as the related ETFs. Clinton’s presidential candidature had hammered the space as she was vehemently against the sector’s price gouging issue (read: Biotech & Pharma ETFs to Suffer in 2017 Too?).
Though the space got a break from controversies post Trump’s win, it again succumbed to tension in early December after Trump pledged to lower drug costs. As per an article published on Bloomberg, “drug-company executives and industry observers have already said that Trump may scrutinize their prices as a populist issue.” As a result, biotech ETFs like BBC underperformed in the month.
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December ETF Scorecard
The market was abuzz with anticipation in December 2016. Speculation was rife over the span of the Trump rally initiated in early November and over how the investing world would react to the Fed rate hike.
Also, traditional investors pinned their hopes on the Santa Claus rally in the most successful trading month of the year. This is largely because U.S. retailers are expected to log ‘the best holiday season in years’ in 2016 and consumer confidence tipped to a 15-year, giving all reasons for a great end-of-season rally.
Whatever the case, the month saw smooth trading but ended on a soft note mostly because the Dow Jones failed to hit the much-wanted 20,000 mark. Profit booking seems to be behind this retreat (read: Inside the 5 Top Performing Stocks of the Dow ETF).
Overall, three key U.S. ETFs, SPY, DOW and QQQ were up 2.4%, 4% and 1.3% in one month (as of December 29, 2016). Against this backdrop, let’s take a look which ETFs topped and which ones lost in December.
Gainers
iPath Bloomberg Natural Gas SubTR ETN
As expected, oil and energy exchanged-traded products stole the show in December following the OPEC output cut deal in late November. On November 30, OPEC decided to slash production by about 1.2 million barrels a day from January for six months. Plus, Plus, on December 10, OPEC cut the first deal with non-OPEC since 2001 to reduce output in 2017.
The news acted as a tailwind for most of the energy ETFs in December. Plus, winter heated up natural gas prices. The “below-normal temperatures over much of the country into the third week of December” and expectations of chills in January actually fired up this long-frozen commodity and sent its prices to a two-year high (read: Natural Gas ETFs Warm Up: Will the Rally Continue?).
Among other energy product gains were United States Gasoline (UGA),iPath Bloomberg Energy SubTR ETN (JJE),iPath Global Carbon ETN (GRN) and SPDR S&P Oil & Gas Equipment & Services ETF (XES).
ETFS Zacks Earnings Small-Cap US
Small-caps continued their dream run in December since Trump’s win besides some dips here and there. An improving U.S. economy, hopes of fiscal reflation and a stronger U.S. dollar bode well for small-cap stocks. This is especially true given the fact that small-cap stocks have greater domestic exposure and are thus largely unruffled by negative currency translation.
iShares MSCI Italy Capped (EWI - Free Report)
Hopes of stabilization in the Italian banking sector gave a boost to this fund. The country’s government approved as much as €20 billion (around $21 billion) for a potential rescue plan for troubled banks. Since financial stocks account for about one-third of the basket, the jump in EWI is self-explanatory (read: What Does Italy Referendum Mean for These ETFs?).
Losers
iPath Bloomberg Nickel SubTR ETN
Weaker demand andprofit-booking took a toll on nickel prices. JJN was off about 14.8% in the last one month (as of December 29, 2016).
iPath Bloomberg Coffee SubTR ETN
Surge in production of the Arabica variety of coffee in Brazil and Colombia dealt a blow to coffee prices. Crop grew 26% in the season starting from July 1 in Brazil, while the estimates for output was upgraded by 5.3% in Colombia. As a result, coffee ETNs did not fare well in the month with JO losing about 14.5% (as of December 29, 2016).
BioShares Biotechnology Clinical Trials (BBC - Free Report)
Be it Clinton or Trump, there seems to be no relief for biotech and pharma stocks as well as the related ETFs. Clinton’s presidential candidature had hammered the space as she was vehemently against the sector’s price gouging issue (read: Biotech & Pharma ETFs to Suffer in 2017 Too?).
Though the space got a break from controversies post Trump’s win, it again succumbed to tension in early December after Trump pledged to lower drug costs. As per an article published on Bloomberg, “drug-company executives and industry observers have already said that Trump may scrutinize their prices as a populist issue.” As a result, biotech ETFs like BBC underperformed in the month.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>