26/07/22 13:56:40

ETFs: Nasdaq lows broken through?

Preis Tafel New York und Paris

The trend towards US equities continues, with some betting on a comeback of the badly battered Nasdaq. Europe's shares, on the other hand, are no longer in such demand. Still a topic: the energy sector.

26 July 2022 Frankfurt (Börse Frankfurt). Energy, recession and interest rate worries continue to keep the markets in check. Although the great wave of selling on the ETF market is a thing of the past, there is no talk of a buying mood either. Frank Mohr from Société Générale reports overall balanced trading with buying and selling, and low turnover, "The holiday season is making itself felt, volatility is no longer so high." Jan Duisberg of ICF Bank also reports quiet trading. "No one knows what will happen next, so it's a wait-and-see situation." Diversification is in high demand, special themes are less sought after.

Yet the situation remains tense: The energy crisis is coming to a head after Russia announced yesterday (Monday) that it would further restrict gas deliveries via the Nordstream 1 pipeline as of Wednesday. In addition, a lot of attention continues to revolve around monetary policy: the ECB surprisingly raised key interest rates significantly last week, and now all eyes are on the USA: the next US Federal Reserve decision is due tomorrow, and a significant increase in key interest rates is expected. The DAX stands at 13,120 points at midday on Tuesday, a minus compared to the previous day.

US equities rather than European equities

As far as equity ETFs are concerned, US stocks continue to be the favourites, followed by global stocks. "This is a trend that has been observed for several weeks, European stocks (IE00BKWQ0Q14) tend to be reduced," explains Mohr. S&P and Nasdaq trackers are heavily traded, sometimes with more selling, as in the Xtrackers S&P 500 Swap (LU0490618542), sometimes with more buying, as in the Amundi Nasdaq-100 Daily Hedged (LU1681038599).

Lang & Schwarz and ICF Bank are also registering high interest in Nasdaq trackers. At ICF Bank, for example, the WisdomTree NASDAQ 100 3x Daily Leveraged (IE00BLRPRL42) is in focus. Although the Nasdaq 100 has left the lows of mid-June behind it, the losses since the beginning of the year are still large at minus 25 per cent. By comparison, the S&P 500 and the DAX have lost "only" 17 per cent this year.

MSCI World ETFs are sometimes on the buy lists (LU0392494562), sometimes on the sell lists (IE00B4L5Y983), as Mohr observes. Duisberg also sees repeated demand for Asian shares, for example with the HSBC MSCI Japan (IE00B5VX7566). Since the beginning of the year, it has fallen by almost 9 per cent.

Jan Duisberg


Electromobility, IT and Blockchain - unduly punished?

The significantly lower prices of tech stocks are being used by Société Générale clients for repositioning. For example, the iShares Electric Vehicles and Driving Technology (IE00BGL86Z12), the Xtrackers MSCI World Information Technology (IE00BM67HT60) and the Invesco CoinShares Global Blockchain (IE00BGBN6P67) end up in the portfolios. Financial sector stocks are mostly sold, while healthcare stocks are bought. "It has become quieter around the energy sector, outflows now predominate here," adds Mohr.

Meanwhile, Torben Bendt of Lang & Schwarz reports rising turnover in gas ETCs. "There is really a lot going on at the moment." The WisdomTree Natural Gas 2x Daily Leveraged (<DE000A2BDED2>) and the WisdomTree Natural Gas 3x Daily Leveraged (IE00BLRPRG98), which reflect the natural gas price development in a leveraged way, are being bought above all. Duisberg sees a lot of interest in the unleveraged WisdomTree Natural Gas (<DE000A0KRJ36>).

Cashing in on linkers

According to Mohr, sales of inflation-linked bonds ("linkers") and corporate securities dominate trading in fixed-income ETFs. The Lyxor EUR 2-10Y Inflation Expectations (LU1390062245), for example, was sold. "This is probably profit taking." Both sides are being played in European government bonds (FR0010754184, LU1287023185), he said.

Cryptos: Interest on the back burner

Trading in crypto ETNs remains uneventful. "We have seen a very significant drop in volumes, too many people have burnt their fingers," Duisberg describes the situation.

The Bitcoin price has fallen by 55 per cent since the beginning of the year, and by as much as 70 per cent since the all-time high in November. "However, there can also be a lot going on at times," reports Bendt from Lang & Schwarz. Last Tuesday, for example, the BTCetc - ETC Group Physical Bitcoin (DE000A27Z304) was bought a lot. On that day, the bitcoin had risen to over 23,000 US dollars; currently it is only 21,085 US dollars again.


from: Anna-Maria Borse, 26 July 2022, © Deutsche Börse AG

About the author

Anna-Maria Borse is a finance and economics editor specialising in the financial market/stock exchange and economic topics. 

Feedback and questions to redaktion@deutsche-boerse.com



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