4 ETF Investing Areas That Ruled Last Week
Wall Street delivered a muted performance last week with the S&P 500 gaining 0.2%, the Dow Jones adding 0.1% and the Nasdaq advancing 0.1%. Escalating tensions in the Middle East, lukewarm U.S. manufacturing data and dockworkers’ strike at U.S. ports weighed on the markets while the release of the upbeat September jobs data helped the markets to stay afloat (read: Fearing Uncertainty in Wall Street? Buffer ETFs May Help).
Escalating Geopolitical Tensions
Tensions in the Middle East escalated on Wednesday following an Iranian missile attack on Israel, sparking demand for safe-haven assets as investors grew anxious about the potential expansion of the conflict (read: Should You Invest in Oil ETFs on Rising Middle East Tensions?).
On Wednesday, Iran claimed that its missile attack on Israel, the largest military assault on the Jewish state, was over unless further provoked. Israel and the United States promised retaliation as fears of a broader war intensified. Israel reported that over 180 ballistic missiles had been fired by Iran, in retaliation for Israeli military actions in Lebanon against Hezbollah.
Damaging Port Strike
On Oct. 1, 2024, dockworkers at ports on the U.S. East Coast and Gulf Coast commenced their first large-scale strike in nearly five decades after contract renewal negotiations broke down. Nearly 50,000 U.S. port workers, across the East and Gulf Coast, started their work stoppage after their six-year contract expired on Sept. 30. However, the Dockworkers’ union suspended the strike finally at the end of the week until Jan. 15, to allow time to negotiate a new contract.
September Jobs Report
The September jobs report offered hopes for the U.S. markets. U.S. job gains increased in September by the most in six months, and the unemployment rate fell to 4.1%, the report showed. Traders reduced bets on a 50-basis-point reduction at the Federal Reserve's Nov. 6-7 meeting. Traders are now pricing in just an 8% chance of a 50-bps rate cut, down from around 31% earlier on Friday, the CME Group's FedWatch Tool showed.
Against this backdrop, below we highlight a few top-performing exchange-traded fund (ETF) areas of last week.
China
VanEck ChiNext ETF CNXT – Up 40.7%
Xtrackers Harvest CSI 500 China A-Shares Small Cap ETF ASHS – Up 26.3%
The rally in China stocks has been going on for quite some days due to the launch of hefty stimulus measures. On Sept. 24, 2024, China's central bank, the People’s Bank of China (PBOC), announced a broad range of monetary stimulus measures aimed at boosting the world's second-largest economy. This move indicates growing concerns within Xi Jinping's administration over the nation’s slowing growth and declining investor confidence. Several China ETFs, thus, have been hovering around a 52-week high.
Volatility
iPath Series B S&P 500 VIX Short-Term Futures ETN VXX – Up 13.6%
As last week was crippled by a myriad of tense issues, volatility in the stock market crept up. There were initial uncertainties related to the labor market, especially till the release of the September jobs data.
Energy
SPDR S&P Oil & Gas Exploration & Production ETF XOP – Up 9.3%
United States Brent Oil Fund LP BNO – Up 8.7%
Oil spiked more than 8% last week as rising conflict led to concerns over potential disruptions to crude supplies. Notably, the Middle East is home to almost a third of global supply (read: ETFs to Profit From Rising Middle East Tension, Port Strike).
Solar
Global X Solar ETF RAYS – Up 9.2%
As oil prices jumped, demand for alternative energy also surged. The underlying Solactive Solar Index of the ETF RAYS provides exposure to companies that are positioned to benefit from further advances in the field of solar technology.
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VanEck ChiNext ETF (CNXT): ETF Research Reports
iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX): ETF Research Reports
United States Brent Oil ETF (BNO): ETF Research Reports
SPDR S&P Oil & Gas Exploration & Production ETF (XOP): ETF Research Reports
Xtrackers Harvest CSI 500 China A-Shares Small Cap ETF (ASHS): ETF Research Reports
Global X Solar ETF (RAYS): ETF Research Reports