ETF Trends
ETF Trends

Exchange traded funds (ETFs) ended flat on Tuesday as investors took advantage of three days of gains to take some profits and rising oil prices reawakened worries about fuel costs cutting into consumer spending.

  • Oil prices pushed above $105 per barrel Tuesday, as traders focused on a series of international crises that could tighten global supplies at a time when consumption is expected to increase. Energy economists continued to gauge how recent unrest in Libya, Bahrain, Yemen and Syria will affect exports from a region that produces 27%  of the world’s oil. Libya, which sits on the largest oil reserves in Africa, has almost totally stopped petroleum shipments as rebels battle pro-Gadhafi troops. The addition of international forces, including the U.S., could mean that the country will be embroiled in a protracted conflict that will keep oil fields offline much longer than previously expected, energy experts said. Iraq’s new oil minister said Tuesday that he expects oil to reach $120 a barrel. Iraq produces about 2.4 million barrels of oil per day. The ProShares Ultra DJ-UBS Crude Oil ETF (NYSEArca: UCO) gained 3.89% today.
  • Japanese equities surged to lead Asian markets higher as easing fears about an earthquake-damaged nuclear power plant and cheap valuations after last week’s sell-off lured investors back into stocks. In Tokyo, the Nikkei Stock Average, which ended last week with net losses of more than 10%, jumped 4.4%. The gains came as several analysts viewed the stocks as undervalued after their recent tumble, with Berkshire Hathaway Inc. Chairman Warren Buffett reportedly saying the slump in Japanese equities was a buying opportunity. “Foreign investors were completely thrown off by Japan’s nuclear-power-plant problems, but there is still room for them to buy back the undervalued shares,” said Masayoshi Yano, a senior market analyst at Meiwa Securities. The iShares MSCI Japan Small Cap Index ETF (NYSEArca: SCJ) ended the day basically flat.
  • Gold futures edged up Tuesday, extending a winning streak to five sessions after spending most of the trading day wavering between small gains and losses. Gold has risen nearly $35 an ounce over its five-session win streak. “I think we’ll trade sideways for a bit while the market digests the recent positive moves in metals and equities,” said Brien Lundin, editor of Gold Newsletter. Over the long term, however, he said he expects “renewed strength in the metals as it becomes evident that the [Federal Reserve] is likely to continue its accommodating monetary policies.” The Market Vectors Gold Miners ETF (NYSEArca: GDX) basically closed break-even today.
  • The  British pound touched a 15-month high after a report showed inflation rose more than forecast, boosting traders’ expectations that the Bank of England will raise interest rates. European finance ministers reached an agreement late Monday on the establishment of a new fund that will be able to lend around 500 billion euros ($710 billion) to troubled Euro-zone countries beginning in 2013. The agreement was widely expected. Tough negotiations remain ahead on enlarging the current bailout fund and other issues as European Union leaders prepare to meet for a summit on Thursday and Friday. The Currency Shares Euro Trust ETF (NYSEArca: FXE) was mixed on Tuesday.

Gregory A. Clay contributed to this article

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.