Stocks and exchange traded funds (ETFs) turned south in early trading as the markets awaited details about the Federal Reserve’s meeting in September. The markets were also concerned about reports that China would be reining in its bank’s lending practices.
According to the ETF Dashboard, most ETFs were toeing the line early while the Federal Reserve’s report is awaited. Investors still showed an affinity for commodities, giving PowerShares DB Agriculture (NYSEArca: DBA) and others a boost. [Behind the Sugar, Coffee and Cocoa ETN Run.]
China’s strong economic growth fueled the growth of large multinational companies as the U.S. and European economies struggle to pull out of a deep recession. In response, SPDR S&P China (NYSEArca: GXC) is trading about 0.5% lower this morning; the fund is 32.7% financials. [ETF Plays for the World’s No. 2 Economy.]
Traders are being very cautious about committing funds prior to the release of the recent Federal Reserve meeting minutes. The recent stock rally was driven in part by the anticipation that the Fed will very soon enact a bond buying program. The iShares Trust Barclays Intermediate Treasury Bond ETF (NYSEArca: IEI) and other Treasury bond funds may benefit if this happens; it’s flat so far this morning. [Tom Makes His ETF Picks on CNBC.]
Asia stocks are sliding as traders react to the dollar languishing to a 15-year low against the yen. Despite comments from Japan’s government to intervene in currency markets as necessary to keep the yen competitive, Japanese stocks are feeling pressure as traders are selling greenbacks in anticipation of the U.S. Federal Reserve flooding the world economy with more dollars as part of its’ “quantitative easing” program. The ProShares UltraShort MSCI Japan (NYSEArca: EWV) is on the move this morning by as much as 2.5%. [Currency ETFs Get Ready to Rumble.]
Gregory A. Clay contributed to this article.
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