While the preference for global and US equities continues, investors are also trying to profit from the oil price rally. They are betting on oil and gas companies, but also on renewable energy companies.
14 June 2022. Frankfurt (Börse Frankfurt). Interest rate and recession worries dominate market activity - also in ETF trading. The DAX has slipped by almost 1,300 points since the beginning of last week, and at midday on Tuesday the index stands at 13,387 points. However, the turnover is rather restrained. "Only yesterday was more busy," reports Frank Mohr of Société Générale. "There was no panic, but there was selling pressure." Over the week, buying and selling would have balanced each other out. Maurice Touma of Lang & Schwarz, on the other hand, reports an increase in trading volume. "When prices fall, turnover goes up for us." The lower prices would be used for a re-entry.
Prefer global and U.S. equities to European stocks - that's the motto in equity ETF trading. Mohr reports that purchases in ETFs such as the SPDR MSCI World (IE00BFY0GT14) and the iShares S&P 500 tracker with currency hedge (IE00B3ZW0K18) are dominating, while sales in the Lyxor Core Stoxx Europe 600 (LU0908500753) are dominating - all but slightly. "There is also a small selling overhang in German equities."
Mohr
Investors are also taking advantage of the significant price declines on the Nasdaq to reposition, as Touma notes. Single-leveraged, but also triple-leveraged products, such as ETNs like the WisdomTree NASDAQ 100 3x Daily Leveraged (IE00BLRPRL42), are in demand, he says.
Oil and gas ETFs with big gains.
Once again, the sector index fund trade is (almost) all about energy ETFs. This is because the oil price has risen significantly again in recent weeks, with the price of a barrel of Brent currently at 123 US dollars, up from 102 US dollars a good month ago. For example, the iShares Oil & Gas Exploration & Production (IE00B6R51Z18) ends up in the portfolios, as Mohr notes. But it's not just the "old" energy sector that's in demand: investors* also bet on providers of new energies, for example with the Lyxor MSCI New Energy ESG Filtered (FR0010524777).
The iShares Oil & Gas Exploration & Production Index tracks oil and gas companies from around the world. It is up 57 percent year-to-date. The MSCI New Energy ESG Filtered tracks the top 20 global alternative energy companies. It is down 11 percent year-to-date, but down 15.6 percent for the year over three years.
Mohr also reports somewhat more buying than selling for technology stocks. For example, the iShares Automation & Robotics (IE00BYZK4552) is showing high turnover. In addition, industrial stocks are also doing well, for example with the iShares Global Infrastructure (IE00B1FZS467) and the SPDR S&P U.S. Industrials Select Sector (IE00BWBXM724).
Bonds: Inflation protection no longer desired
Trading in bond ETFs is currently rather quiet. Clients of Société Générale, for example, are betting on European government bonds (IE00B3S5XW04) and U.S. high-yield corporate bonds with short maturities (IE00BCRY6003). "It is also noticeable that inflation-linked bonds are being sold again," explains Mohr. He cites Lyxor EUR 2-10Y Inflation Expectations (LU1390062245) as an example.
Crypto crash: optimists get in on the action
Turmoil currently reigns in the cryptocurrency market. Celsius, the crypto trading platform, had suspended selling and buying yesterday morning, setting off a broader crypto price crash around the world. Bitcoin is currently trading at just US$22,487, down from nearly US$30,000 recently and nearly US$67,000 at its all-time high in November.
"8,000 US dollars less within such a short time, that's a lot even for bitcoin," Touma comments. However, many investors see this as a good opportunity to enter. At Lang & Schwarz, they are focusing on the BTCetc - ETC Group Physical Bitcoin (DE000A27Z304).
Shares | |
World | Buys |
USA | Buys |
Europe | Sales |
Nasdaq | Buys |
Industries | |
Oil producers | Buys |
Technology | Buys |
Industrial sector | Buys |
Bonds | |
Inflation protected bonds | Sales |
by Anna-Maria Borse, 14 June 2022, © Deutsche Börse AG
Anna-Maria Borse is a finance and economics editor specializing in financial markets/stock markets and economic topics.
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