Equity markets moved higher in choppy trading last week, as a brutal Wednesday was followed by a 3% surge in major indexes on Thursday. This upswing led to a 2.3% gain on the week for the S&P 500. Oil markets also moved higher on bullish demand data and worries about diminishing supplies; crude closed around $74 per barrel, roughly a $3 gain on the week. However, gold was unable to continue its record run, slumping back toward the $1,225 mark per ounce as investors embraced risk and snapped up beaten-down assets, putting aside sovereign debt issues for the time being.
This week, more key central banks will be meeting, including Japan and Switzerland, while there will be a variety of highly anticipated data releases in the U.S. Also, look for shares of BP to be in focus, given the talk of the company suspending its dividends to pay for the oil-spill cleanup. Below, we profile three ETFs that could be very active this week:
iShares Barclays TIPS Bond Fund
Why TIP could be on the move: After months of tame inflation readings, signs of rising consumer price inflation (CPI) are emerging; in China, inflation is expected to top 3% this year. TIP looks to be in focus as U.S. CPI figures for last month are released on Thursday. Numbers last month were essentially flat and look to remain relatively low for the foreseeable future. However, should inflation jump, look for TIP to dramatically increase in popularity in the coming weeks (see How The Chinese Yuan ETF Could Drive TIP).
iShares Dow Jones Transportation Average Index Fund
Why IYT could be on the move: Federal Express, the largest component of IYT at 12% of assets, will post earnings this week. Analysts are forecasting per-share profits of $1.32, up handily from $0.64 a share in the previous year. Investors will especially focus on FedEx's guidance for the following year as well as volume levels, which could both be key figures for the rest of the transportation sector. Some analysts, including those at Piper Jaffray, are extremely bullish on FedEx, giving the company a $110 price target, which is a substantial increase from its current price just below $80. Should FedEx manage to live up to these lofty expectations, look for IYT to shoot higher in midweek trading (see How To Use ETFs To Invest Like Warren Buffett).
iShares MSCI South Africa Index Fund
Why EZA could be on the move: With the World Cup in full swing, it will be interesting to see how the event affects the South African economy. Some analysts are predicting that the monthlong event will pump at least $12 billion into the local economy. But others have tempered expectations and worry that lavish spending on stadiums over more basic needs will pose long-term problems. Analysts should be able to get a full estimation of the impact by the end of the week, with special attention given to the mining sector, which is under threat of a blackout because of higher electricity needs during the Cup (see holdings of EZA here).
Last week's ETFs to watch
CurrencyShares Euro Trust
iShares MSCI Netherlands Index Fund
iShares MSCI Brazil Index
Disclosure: Eric is long EWZ.
ETF Database is not an investment advisor, and any content published by ETF Database does not constitute individual investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. From time to time, issuers of exchange-traded products mentioned herein may place paid advertisements with ETF Database. All content on ETF Database is produced independently of any advertising relationships. Read the full disclaimer here.
For more ETF news and analysis, sign up for ETF Database's free ETF newsletter.