Top ETF Stories Of January
Zacks Investment Research | Feb 01, 2018 01:17AM ET
The first month of 2018 was upbeat for the broader market with SPDR S&P 500 ETF (NYSE:SPY) (AX:SPY) , SPDR Dow Jones Industrial Average (SI:SPDR) ETF (V:DIA) and PowerShares QQQ ETF QQQ adding about 4.8%, 5.1% and 6.4% as of Jan 30, 2018. There were several developments in the investing backdrop and asset classes.
Here, we would like to note key ETF events in the month of January.
Spike in Bond Yields
The bond market started the year with higher yields.The yield on the 10-year Treasury notes rose 27 bps in the month (as of Jan 30, 2018). The yield on the benchmark two-year Treasury note hit close to its highest level since September 2008. iShares 1-3 Year Treasury Bond ETF Prepare for Bond Bear Market With These ETFs ).
Earnings Season Unfolds
The Q4 earnings season is off to a strong start, with earnings from 133 S&P 500 companies that have reported results up 4 ETFs Set to Surge in Q4 Earnings ).
No Bitcoin ETF, But Blockchain Makes Inroads
Hopes were high about a probable bitcoin ETF launch this year. But responding to two investment associations on Jan 18, a public letter writtenby Dalia Blass, director at SEC's Division of Investment Management, revealed that there are "significant investor protection issues that need to be examined before sponsors begin offering these funds to retail investors." According to Blass, the agency is skeptical about valuation, liquidity, custody, arbitrage and potential manipulation.
On the other hand, blockchain ETFs were launched last month. Reality Shares Nasdaq NexGen Economy ETF Forget Bitcoin, Bet on Blockchain With These New ETFs ).
IPO's Decade-High Start to 2018
The U.S. IPO market was off to a great start in 2018. We have probably seen the busiest January for deals in four years, as per Renaissance Capital and as quoted on MarketWatch. The recent rise in IPO activity can be credited to a surging stock market, improving economic fundamentals and increasing consumer sentiment that have led to the appeal for new stocks with high growth potential.
In such an upbeat environment, one should keep a tab on IPO ETFs like First Trust US Equity Opportunities ETF (V:FPX) and Renaissance IPO ETF (TO:IPO) (read: Play IPO's Decade-High Start to 2018 With These ETFs ).
NAFTA Talks
From his campaign days, Trump has indicated that he wants to renegotiate the North American Free Trade Agreement (NAFTA) or totally remove it. The agreement had tied up the United States, Canada and Mexico for more than two decades. Rumors are rife that President Donald Trump will announce that the United States will walk out of NAFTA ETFs to Watch if U.S. Pulls Out of NAFTA ).
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While NAFTA makes up just a fraction of the U.S. economy, it specifically represents substantial portions of Mexico and Canada’s GDP. A huge portion of U.S. trade deficit with Mexico is from the auto sector. Thus, country ETFs like iShares MSCI Mexico Capped CARZ were in focus in the month.
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