ETF Trends
ETF Trends

Stock exchange traded funds (ETFs) are bouncing back on Friday after falling a day earlier following another major earthquake in Japan. But rising oil prices and the possibility of a government shutdown over a budget impasse could weigh on the market.

  • Japanese stocks jumped Friday to lead most Asian markets higher, with Tokyo Electric Power Co. driving gains on relief that a powerful earthquake overnight hadn’t inflicted much damage and as Fast Retailing Co. rose after lifting its profit outlook. “News that [Thursday’s tremors] had caused limited damage has helped spur buying,” said IG Markets strategist Ben Potter in Melbourne. “Whilst the market is likely overbought in the short term, it appears there is just a lot of money flowing into equities.” The gains in Tokyo came as the 7.1-magnitude earthquake in Northeastern Japan Thursday night reportedly caused little damage. The ProShares Ultra MSCI Japan ETF (NYSEArca: EZJ) surged almost 5% early Friday.
  • European markets rose on Friday, buoyed by a rally in Japanese stocks overnight and a surge in precious-metal prices. The Stoxx Europe 600 index advanced 0.5% to 282.3 in late-morning trading, led by mining and insurance stocks. The benchmark finished 0.3% lower on Thursday after Japan was shaken by another earthquake, and the European Central Bank raised interest rates for the first time in nearly three years, as expected. “There was relief in Asia after the tsunami warning was lifted and that carried on to the European markets this morning,” said Oliver Gilvarry, head of research at Dolmen Stockbrokers. “The interest-rate hike from the ECB and the Portuguese news were well priced in so there is nothing negative strongly affecting sentiment,” he added. The SPDR Euro Stoxx 50 ETF (NYSEArca: FEZ) rose approx. 1.5% in early trading.
  • Crude futures advanced Friday to approach the $112-a-barrel level, a fresh 2 ½-year high. Even more eye-popping were the pricier Brent crude futures, which moved up to $124 a barrel. The buying momentum continued in the face of fading hopes for a quick resolution of the Libyan conflict. A week ago, crude-oil futures traded at $106 a barrel, and prices have been climbing since then. A weakening U.S. dollar and uncertainty about a possible U.S. government shutdown provided a backdrop for higher crude-oil prices. The ProShares Ultra DJ-UBS Crude Oil ETF  (NYSEArca: UCO) is trading almost 2% higher today.
  • Gold futures traded at fresh record levels and silver topped $40 an ounce Friday, with investors chasing the safety of precious metals. Gold for June delivery was up $11.40, or 0.8%, at $1,470.70 an ounce on the Comex division of the New York Mercantile Exchange. It earlier tapped a high of $1,474.50 an ounce. “Gold continues to draw support from the ongoing geopolitical uncertainty … dollar weakness, elevated oil prices, concerns over inflation and …. Portugal’s request for financing from the European Union,” analysts at Barclays Capital wrote in a research note. Citing World Gold Council data, the Barclays note said Portugal holds 81% of its reserves in gold. The Direxion Daily Gold Miners Bull 2x Shares ETF (NYSEArca: NUGT) jumped almost 4% so far on Friday.

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.