The S&P/ASX 200 gained 1.8% last week, its best weekly performance in over a year. Every sector registered a positive return for the week, with Financials, Materials and Real Estate sectors being the largest contributors. Small cap stocks also performed strongly, with three domestic small cap ETFs (MVS, ISO and SSO) all returning close to 3% for the week. Offshore, the S&P 500 declined modestly, despite a technology-driven recovery towards the end of the week. ETFS Morningstar Global Technology ETF (TECH) was the top performing international fund for the week.
The recent U.S. dollar rally continued last week as the Fed expressed confidence in the U.S. inflation outlook. The DXY Dollar Index gained 1.1% and reached new 2018 highs. The Australian dollar dropped below US75c before recovering in late trading on Friday. The euro declined by 1.4% against the U.S. dollar following disappointing eurozone inflation numbers.
WTI crude oil continued to rally, adding 2.4% for the week. Precious metals mostly retreated, with gold declining 0.7% to US$1,315/oz. The broad Bloomberg Commodity Index gained 0.7%.
The Australian ETF market saw inflows of $283m into and outflows of $60m from domestically domiciled funds last week. Broad-based domestic equity funds saw $82m of inflows across VAS, STW, MVW and EX20, while investors switched from Vanguard MSCI Index International Shares Hedged ETF (VGAD) to its unhedged counterpart (VGS).
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Global equity markets mostly advanced last week as North Korea risks receded. The S&P/ASX 200 added 1.5%, the EURO STOXX 50 gained 0.7% and the Nikkei 225 added 1.4%. The S&P 500 ended the week flat after recovering from some disappointing earnings results, mainly across the industrials sector. Defensive sectors returned to favour, with global and domestic property funds (DJRE and RENT) amongst the top performers. ETFS S&P 500 High Yield Low Volatility ETF (ZYUS) benefited from strong performances across the utilities and real estate sectors, returning 3.3% for the week.
The U.S. dollar strengthened last week, with the DXY Dollar Index gaining 1.4%, and U.S. 10-year Treasury yields reached 3%. ETFS Physical U.S. Dollar ETF (ZUSD) returned 1.4% for the week as the Australian dollar dropped below US76c for the first time in 2018.
WTI crude oil held firm last week, close to its recent 3-year highs above US$68/bbl. Precious metals retreated, with gold declining 0.9% and silver falling 3.6%. The broad Bloomberg Commodity Index fell 0.5%.
The Australian ETF market saw inflows of $66m into and outflows of $23m from domestically domiciled funds last week. The largest inflows were into iShares CORE Composite Bond ETF (IAF) and iShares Edge MSCI Multifactor ETF (WDMF). The largest outflows were from iShares S&P/ASX 20 ETF (ILC).
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ETFSTrade idea – Conflicting signals in the U.S. - Time for caution?
ETFS S&P 500 High Yield Low Volatility ETF (ZYUS)
ETFS Physical U.S. Dollar ETF (ZUSD)
The U.S. economy continues to surprise to the upside with
markets rebounding strongly.
Yet rising inflation, subdued long-term rates and geo-political
risks remain a concern.
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Global equity markets advanced last week. The S&P 500 added 0.5% on strong earnings reports, moving into positive territory YTD before pulling-back on Friday. The EURO STOXX 50 added 1.3%, while the Nikkei 225 gained 1.8%. Domestically, the S&P/ASX 200 Index was led higher by the resources sector, adding 0.7%. Domestic resource sector ETFs (QRE and OZR) were the top performing equity funds, returning in excess of 3.7% for the week. iShares MSCI Singapore ETF (ISG) was the top performing international equity fund for the week.
The U.S. dollar strengthened last week, with the DXY Dollar Index gaining 0.6%. U.S. 10-year Treasury yields neared 3%, while the 2yr-10yr yield spread dropped to levels not seen since 2007. The Australian dollar dropped 1.2%, ending the week at US76.72c.
WTI crude oil added 1.4% to end the week at US$68.38/bbl, reaching new 3-year highs. Gold dropped 0.7% to US$1336/troy ounce, but continues to trade well above its longterm moving average. ETFS Physical Palladium (ETPMPD) and ETFS Physical Silver (ETPMAG) were the top performing funds for the week, returning 5.9% and 5.0% respectively.
The Australian ETF market saw inflows of $82m into and outflows of $13m from domestically domiciled funds last week. The largest inflows were into BetaShares U.S. Dollar ETF (USD) and ETFS Physical Gold (GOLD). Outflows were spread across a range of equity and cash funds.
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Global equities rose last week despite U.S. military action in Syria and further global trade concerns. The S&P 500 gained 2.0% as company tax cuts started to flow into Q1 earnings reports. Energy and technology were the top performing sectors. Elsewhere the EURO STOXX 50 rose 1.2%, while the Nikkei 225 gained 1.0%. Domestically, the S&P/ASX 200 added 0.7%. Energy and resource sector ETFs (FUEL and QRE) were amongst the top performers last week, while defensive sector funds like infrastructure (CORE) and real estate (MVA) were amongst the poorest performers.
U.S. CPI inflation rose to 2.4% pushing the 2yr-10yr Treasury spread to its narrowest since 2007 and firming rate-rise expectations. The Australian dollar gained 1.0%, ending the week at US 77.64c. The euro gained 0.4% against the U.S. dollar, while the U.S. dollar gained 0.4% against the yen.
Crude oil rallied on U.S. involvement in Syria. WTI crude added 8.6% for the week. OOO was the week's top performing ETF, returning 8.5%. Gold gained 1.0% on safe-haven flows, while palladium jumped 9.2% on Russian supply concerns. ETPMPD returned 7.2% for the week.
The Australian ETF market saw inflows of $149m into and outflows of $26m from domestically domiciled funds last week. The largest inflows were into BetaShares S&P/ASX 200 Resources Sector ETF (QRE) and a range of equity and cash funds. The largest outflow for the week was from UBS IQ Morningstar Australia Dividend Yield ETF (DIV).
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US-China trade tensions dominated financial markets last week. The S&P 500 fell by 1.4%, with technology and industrial stocks leading the decline. The VIX peaked above 24.0 on Tuesday. In Europe, PMI data failed to meet expectations, but the EURO STOXX 50 still added 1.4%. Domestically, the S&P/ASX 200 gained 0.5%. Australian resource sector ETFs were amongst the best performers last week, with MVR, QRE and OZR all returning in excess of 1.6%.
The Australian dollar range traded last week, ending slightly higher at US 76.84c. The U.S. dollar gained against both the euro and yen. U.S. and Australian treasury yields both rose.
WTI crude oil dropped 4.4% for the week. Gold gained 0.6% as investors looked to diversify out of volatile equity markets. Platinum declined 1.6% and palladium dropped 5.0% as auto-industry concerns around U.S. - China trade tariffs heightened. Palladium was further impacted by potential sanctions on Russia, the world's largest producer. ETPMPD, OOO and ETPMPT were all amongst the poorest performing funds for the week.
The Australian ETF market saw inflows of $27m into and outflows of $246m from domestically domiciled funds last week. Inflows were spread across a range of equity and fixed income funds. iShares S&P/ASX 200 ETF (IOZ), saw redemptions of $185m and BetaShares Australian High Interest Cash ETF (AAA) lost $56m in assets.
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