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Leveraged ETF Roundup: Gold Miners Gain, Brazil Erodes
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Last week, the leveraged/inverse ETF world was mostly influenced by the US-China trade tensions, crisis in the Middle East and pain in the emerging market pack. ETFs which gained and lost the most last week were impacted by these events.
Let’s take a look at some top and worst performing leveraged/inverse ETFs of the last week.
Gainers
Direxion Daily Gold Miners Index Bull 3X Shares (NUGT - Free Report) – Up 5.9%
Gold Miners ETFs – often trading as a leveraged play on gold the commodity as well – have had an upbeat week. Hopes of a trade deal faded considerably last week as both the United States and China were engaged into a full-blown trade war (read: 4 Reasons to Go for Gold ETFs).
As soon as the Trump administration hiked tariffs on $200 billion worth of Chinese goods from 10% to 25% on May 10, China announced on May 13 a retaliatory move – an increase in tariffs on $60 billion of American goods to 25% beginning Jun 1. Trump is also considering additional tariffs on an incremental $325 billion of Chinese imports.
The move bolstered the safe-haven asset gold and also gave a boost to this leveraged mining ETF.
United States 3x Oil Fund – Up 5.5%
There was a sudden eruption of the Middle East crisis. Per CNBC.com, “a Saudi-led military coalition in Yemen carried out several air strikes on the Houthi-held capital Sanaa on Thursday after the Iranian-aligned movement claimed responsibility for drone attacks on two Saudi oil pumping stations earlier in the week.” Also, at the start of the week, two of Saudi Arabia’s oil tankers were sabotaged off the coast of the United Arab Emirates. As a result, fears of supply disruptions made oil and energy-related ETFs winners last week (read: Energy ETFs Rallying on Gulf Crisis: 5 High-Yielding Winners).
Utilities is considered a safer sector and thus outperformed in the phase of renewed trade tensions. Investors should note that amid market uncertainty, U.S. treasury yields tend to fall, which is a big boon for rate-sensitive sectors like utilities.
Losers
Direxion Daily MSCI Brazil Bull 3X Shares (BRZU - Free Report) – Down 23%
Weakening growth forecasts and waning confidence in President Jair Bolsonaro sent Brazil's stocks and currency to their lowest level of the year lately, per the source. Escalation in U.S.-trade tensions also thumped stocks and currencies in emerging markets like Brazil.
Last week, economists at Bank of America Merrill Lynch and Barclays pared growth forecasts. Market analysts cut their full-year growth forecasts for 11 weeks in a row and now expect the economy to grow by an anemic 1.45%, according to the latest central bank survey. This clearly explains the decline in this bullish Brazil ETF.
U.S. semiconductor companies have huge revenue exposure to China. Per Morgan Stanley equity strategists, “semiconductor and semiconductor equipment companies have the highest revenue exposure to China at 52%” and are thus exposed to maximum risks on rising trade tensions” (read: Full-Blown Trade Spat: 5 Most-Vulnerable Sector ETFs & Stocks).
MicroSectors FANG+ Index 3X Leveraged ETN (FNGU - Free Report) – Down 15.1%
The underlying NYSE FANG+ index includes 10 highly liquid stocks that represent a segment of the technology and consumer discretionary sectors consisting of highly-traded growth stocks of technology and tech-enabled companies. Tech stocks were a victim of the trade spat, which is why the ETN FNGU lost last week.
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Leveraged ETF Roundup: Gold Miners Gain, Brazil Erodes
Last week, the leveraged/inverse ETF world was mostly influenced by the US-China trade tensions, crisis in the Middle East and pain in the emerging market pack. ETFs which gained and lost the most last week were impacted by these events.
Let’s take a look at some top and worst performing leveraged/inverse ETFs of the last week.
Gainers
Direxion Daily Gold Miners Index Bull 3X Shares (NUGT - Free Report) – Up 5.9%
Gold Miners ETFs – often trading as a leveraged play on gold the commodity as well – have had an upbeat week. Hopes of a trade deal faded considerably last week as both the United States and China were engaged into a full-blown trade war (read: 4 Reasons to Go for Gold ETFs).
As soon as the Trump administration hiked tariffs on $200 billion worth of Chinese goods from 10% to 25% on May 10, China announced on May 13 a retaliatory move – an increase in tariffs on $60 billion of American goods to 25% beginning Jun 1. Trump is also considering additional tariffs on an incremental $325 billion of Chinese imports.
The move bolstered the safe-haven asset gold and also gave a boost to this leveraged mining ETF.
United States 3x Oil Fund – Up 5.5%
There was a sudden eruption of the Middle East crisis. Per CNBC.com, “a Saudi-led military coalition in Yemen carried out several air strikes on the Houthi-held capital Sanaa on Thursday after the Iranian-aligned movement claimed responsibility for drone attacks on two Saudi oil pumping stations earlier in the week.” Also, at the start of the week, two of Saudi Arabia’s oil tankers were sabotaged off the coast of the United Arab Emirates. As a result, fears of supply disruptions made oil and energy-related ETFs winners last week (read: Energy ETFs Rallying on Gulf Crisis: 5 High-Yielding Winners).
Direxion Daily Utilities Bull 3X Shares (UTSL - Free Report) – Up 4.7%
Utilities is considered a safer sector and thus outperformed in the phase of renewed trade tensions. Investors should note that amid market uncertainty, U.S. treasury yields tend to fall, which is a big boon for rate-sensitive sectors like utilities.
Losers
Direxion Daily MSCI Brazil Bull 3X Shares (BRZU - Free Report) – Down 23%
Weakening growth forecasts and waning confidence in President Jair Bolsonaro sent Brazil's stocks and currency to their lowest level of the year lately, per the source. Escalation in U.S.-trade tensions also thumped stocks and currencies in emerging markets like Brazil.
Last week, economists at Bank of America Merrill Lynch and Barclays pared growth forecasts. Market analysts cut their full-year growth forecasts for 11 weeks in a row and now expect the economy to grow by an anemic 1.45%, according to the latest central bank survey. This clearly explains the decline in this bullish Brazil ETF.
Direxion Daily Semiconductor Bull 3X Shares (SOXL - Free Report) – Down 15.8%
U.S. semiconductor companies have huge revenue exposure to China. Per Morgan Stanley equity strategists, “semiconductor and semiconductor equipment companies have the highest revenue exposure to China at 52%” and are thus exposed to maximum risks on rising trade tensions” (read: Full-Blown Trade Spat: 5 Most-Vulnerable Sector ETFs & Stocks).
MicroSectors FANG+ Index 3X Leveraged ETN (FNGU - Free Report) – Down 15.1%
The underlying NYSE FANG+ index includes 10 highly liquid stocks that represent a segment of the technology and consumer discretionary sectors consisting of highly-traded growth stocks of technology and tech-enabled companies. Tech stocks were a victim of the trade spat, which is why the ETN FNGU lost last week.
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 >>