Stocks and equity-based exchange traded funds have remained relatively range bound over July, dancing around back-and-forth, as investors weighed geopolitical volatility overseas against stronger economic data.
Over the past month, the Dow Jones Industrial Average, the Nasdaq Composite and the S&P 500 all declined about 0.2%.
The top performing non-leveraged ETFs over July include iShares MSCI UAE Capped ETF (NasdaqGM: UAE) up 13.8%, iShares MSCI Qatar Capped ETF (NasdaqGM: QAT), up 12.8% and Market Vectors Indonesia Small-Cap ETF (NYSEArca: IDXJ) up 12.6%.
After a steep sell-off in June on escalating violence in Iraq, middle East markets, like the United Arab Emirates and Qatar, plunged on the risk-off pressure. Despite being upgraded to emerging market status in May, the two countries still act like frontier markets in investors’ eyes. [Another Dismal Day for the UAE ETF]
“The stocks should not have moved up so much, they should not have dropped so much – we have sat on the sidelines and watched,” Andrew Brudenell, frontier fund manager at HSBC Global Asset Management, said in a Reuters article. “This is sometimes how frontier markets behave.”
Meanwhile, Indonesian stocks surged on the back of the election season, with many expecting reform-minded Jakarta Governor Joko Widodo to win. [Indonesia ETFs Jump Ahead of Presidential Elections]
The worst performing non-leveraged exchange traded products over the past month include the iPath Dow Jones-UBS Natural Gas Total Return Sub-Index ETN (NYSEArca: GAZ) down 17.8%, United States Natural Gas Fund (NYSEArca: UNG) down 15.5%, iPath Seasonal Natural Gas ETN (NYSEArca: DCNG) down 15.1%.
At the beginning of July, U.S. markets gained momentum on strong economic data, notably a better-than-expected increase in nonfarm payrolls and non-manufacturing report, which helped lift the Dow above 17,000 for the first time.
Good old fashion profit taking, though, pulled down on the equities market after the record run up. However, policy normalization, Federal Reserve guidance and better earnings results helped stabilize the markets.
In mid-July, risk aversion gripped the market. International markets were riled on reports that Malaysian Flight MH17 was downed over Ukraine. Moreover, escalating civil unrest in Iraq and Israeli’s offensive in Gaza fueled stability concerns.
Markets weakened in the last week of the month on the slow growth in the housing market and unexpected earnings misses, notably Amazon (NasdaqGS: AMZN) and Visa (NYSE: V).
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Max Chen contributed to this article.