ETFs: Setbacks tempt to enter
Despite the subdued outlook in the current reporting season, technology stocks are being bought selectively. The upcoming dividend figures also seem to make corresponding strategy ETFs more attractive again.
3 May 2022. Frankfurt (Börse Frankfurt). At the beginning of the month, the situation on the stock markets remains fragile. The volatility index VDAX-New rises to around 34 percent. "Investors are clearly more risk-averse," comments André Sadowsky from Commerzbank.
The S&P 500 recorded its weakest start to the year since 1942. Despite the pessimistic environment, Frank Mohr of Société Générale reports good trading, with the buying side predominating. "Last week, institutional investors in particular were more active than average." Now at the start of the month, volumes were up as many ETF savings plans were executed. "Nevertheless, the uncertainty is undeniable," adds Mohr. Investors are mainly looking at how the corporate outlook for the reporting season will turn out. "The first quarter went well for many companies, as expected, but now it's a question of which areas will be affected.
Market situation: Interest rate fear and nervousness continue
"Interest rate fear and nervousness are currently shaping trading," is how Jan Duisberg of ICF Bank sums up events. The start of the year has been weak, he said. "Investors have lost money in both equities and bonds." The declines in the indices were not dramatic, he said. "But when prices are strong, people sell right back."
Caution is increasing ahead of the Fed's interest rate decision on Wednesday. "An interest rate step of 50 basis points is priced in, but in the meantime many investors are already looking at the next decision and are increasingly expecting a larger interest rate step of 75 basis points," Duisberg continues.
Duisberg
Equity ETFs: US equity trackers dominate trading
In Société Générale's ETF trading, purchases of US equity ETFs stand out, such as the iShares S&P 500 Swap UCITS (IE00BMTX1Y45) and the sustainable tracker iShares MSCI USA ESG Enhanced (IE00BHZPJ890). Mohr's clients sold eurozone equity ETFs, as evidenced by outflows from the Xtrackers EURO STOXX 50 (LU0380865021). Global indices were also removed from portfolios in favour of US stocks, including the iShares Core MSCI World (IE00B4L5Y983).
Dividends are in demand at Lang & Schwarz. Maurice Touma reports that, in keeping with the season, his clients bought shares in the SPDR S&P US Dividend Aristocrats (IE00B6YX5D40).
It was a different story for Duisberg, who reported purchases of the STOXX Europe Mid 200 UCITS ETF (<IE00B60SX063>). The ETF contains the 200 largest midcaps in Europe.
Technology in demand despite mixed results
"The negative news from the technology sector on the reporting season is not deterring," Touma comments. Setbacks in the Nasdaq would be used to enter, e.g. in the iShares Nasdaq-100 (DE000A0F5UF5). Besides Nasdaq trackers, other technology ETFs are in focus, including Xtrackers MSCI World Information Technology (IE00BM67HT60). His impression: investors are looking less at figures and outlooks than at entry opportunities that they consider favourable.
Mohr also reports predominant buying of tech trackers, albeit very selectively. The iShares Automation & Robotics (IE00BYZK4552), for example, is seeing inflows. In addition, the healthcare sector is gaining buying interest, which is reflected in inflows into the iShares Ageing Population (IE00BYZK4669).
Commodities less in focus
Issuers are currently seeing little interest in the commodities book, especially in oil ETCs. Demand for precious metals, on the other hand, is balanced: Duisberg registered purchases of silver. The Physical Silver ETC from WisdomTree (<DE000A0N62F2>) is particularly sought after. On the other hand, Mohr's clients took the Lyxor NYSE Arca Gold BUGS (< LU0488317701>) out of their portfolios.
Fixed income: medium-term government bonds in demand
Traders report quiet trading in bond ETFs, although US 10-year yields are trading above 3 percent for the first time since 2018. With yields rising for some European interest rate products, Duisberg notes buying in the Lyxor Euro Government Bond 5-7y (LU1287023003).
Mohr also reports demand for European government bonds with short and medium maturities. His books were dominated by inflows in the iShares Euro Government Bond 1-3yr (IE00B14X4Q57), iShares Euro Government Bond 3-5yr (IE00B1FZS681) and Lyxor Euro Government Bond 3-5Y (LU1650488494)
| Equity | |
| World | Sells |
| USA | Buys |
| Europe | Sells |
| Industries | |
| Technolody | Buys |
| Healthcare | Buys |
| Basic Materials | Sells |
| Bonds | |
| shortterm european treasury bonds | Buys |
| middleterm european treasury bonds | Buys |
from Antje Erhard 3 May 2022, © Deutsche Börse AG
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