Ahead of the expected next interest rate hike in the US, investors remain cautious without selling on a large scale. With rising turnover, lower price levels are used for moderate portfolio additions.
20 September 2022. Frankfurt (Börse Frankfurt). The downturn on the stock markets is not triggering any selling pressure in ETF trading. Increased turnover is reported from the trading floors. But market participants remain cautious ahead of the expected interest rate hike by the US Federal Reserve on Wednesday.
"Turnover has increased over the past two weeks, but there is no selling wave," reports Jan Duisberg of ICF Bank. Investor fears were not reflected in ETF trading, although the three main themes remain dominant in the market: Interest rate, inflation and recession fears. Selective buying is taking place again, however.
Frank Mohr from Société Générale also reports normal trading activity. "We are not registering any great selling pressure. There is even a slight buying overhang on a weekly basis.
Mohr
Demand for US indices and global equity index trackers
In the day-to-day business of Société Générale, trading in US products dominates among the equity trackers, with purchases and sales in balance. The Vanguard S&P 500 (IE00B3XXRP09) is sold.
The second strongest volume is in products of global equity indices. They are predominantly bought by Société Générale clients. The buy side dominates the iShares Core MSCI World (<IE00B4L5Y983) as well as the SPDR MSCI World (IE00BFY0GT14).
At Duisberg, mid-cap German stocks (DE000ETFL441) and the EURO STOXX 50 (IE00B60SWX25) are sought after. "Here, turnover is good." Duisberg is also registering high demand for US technology stocks: here he is investing leveraged with the WisdomTree NASDAQ 100 3x leveraged. "This is one of the classics that is in demand."
Sectors: selling energy, buying financial products
Among sectors, equity ETFs with technology stocks are the most traded at Société Générale. Mohr reports that purchases and sales are quite balanced here. The Lyxor MSCI World Information Technology (LU0533033667) was bought. It has lost a good 5 per cent on a weekly basis and around 10 per cent on a six-month basis. Duisberg has also seen renewed interest in technology. Duisberg is registering demand for a slightly more exotic investment opportunity, WisdomTree Cloud Computing (IE00BJGWQN72).
According to Mohr, the buy side predominates in energy stocks, which are the second most heavily traded of all sectors. In demand here is the iShares STOXX Europe 600 Oil & Gas (DE000A0H08M3), which was on the sell list last trading week. Among the previous week's sought-after stocks, financials, selling now prevails, especially in European stocks in the sector (LU1829219390)
Fixed income: US government securities with short maturities bought
Lower than the previous week is the demand for bond market products. "Fixed income accounts for 20 per cent of trading volume this week, while a quarter to 30 per cent is common," Mohr reports. US government bonds with short maturities stand out in debt securities trading. In demand here is the iShares USD Treasury Bond 1-3yr (IE00B14X4S71). European corporate stocks are also rising in investors' favour: Mohr's order books show buying in Shares Core Euro Corp Bond (IE00B3F81R35).
Crypto ETPs benefit from market recovery
Following Ethereum's switch from the consensus Proof of Work mechanism to Proof of Stake, the price of the second-largest cryptocurrency is falling, as are most other major cryptos. The update "The Merge" had been implemented without complications last week. As of now, Ethereum consumes significantly less power. Four more planned updates will follow in the coming years. Duisberg notes purchases of a classic: the VanEck Ethereum (DE000A3GPSP7), which has fallen by around 15 percent on a weekly basis, is in demand.
Precious metals: Price slide as buying opportunity
The price slide in precious metals in the wake of the US Federal Reserve's interest rate hikes, meanwhile, is being seen in some quarters as a buying opportunity. Duisberg reports increased demand for gold, which is being met with the purchase of the Gold Bullion Securities (<DE000A0LP781>).
Shares | |
World | Buys |
USA | Buys and Sales |
Europe | Buys |
Industries | |
Energy | Buys |
Technology | Buys and Sales |
Finance | Sales |
Crypto | Buys and Sales |
Fixed-Income | |
Short-term US government bonds | Buys |
European government bonds | Buys |
by Antje Erhard, 20 September 2022, © Deutsche Börse AG
Antje Erhard ist Journalistin und Moderatorin mit den Schwerpunkten Börse, Wirtschaft und Finanzen.
Feedback und Fragen an redaktion@deutsche-boerse.com.