ETF Trends
ETF Trends
  • Depreciating Euro currency helps Eurozone ETFs
  • Stronger-than-expected U.S. manufacturing data send euro currency to one-month low against the U.S. dollar
  • BMW among auto stocks that jumped thanks to depreciating euro

Eurozone exchange traded funds bounced back above short-term trend as the depreciating Euro currency helped improve the export industry’s outlook.

The non-hedged iShares MSCI EMU ETF (NYSEArca: EZU) added 3.1% Tuesday while the SPDR EURO STOXX 50 (NYSEArca: FEZ) rose 3.0%.

Meanwhile, on Tuesday, the currency-hedged Deutsche X-trackers MSCI EMU Hedged Equity ETF (NYSEArca: DBEZ) was up 2.9%, iShares Currency Hedged MSCI EMU ETF (NYSEArca: HEZU) rose 3.0% and WisdomTree Europe Hedged Equity Fund (NYSEArca: HEDJ) gained 3.1%. The currency-hedged Eurozone ETFs were trading back above their short-term, 50-day simple moving average.

“Sentiment is starting to improve,” John Plassard, senior equity-sales trader at Mirabaud Securities LLP, told Bloomberg. “Everybody was thinking it was the end of the financial world but this was not the case. Crude is up, the auto sector is doing well. And recent economic fundamentals globally haven’t been bad.”

The euro currency weakened Tuesday after stronger-than-expected U.S. manufacturing data sent the euro currency to a fresh one-month low against the U.S. dollar, Reuters reports.

The CurrencyShares Euro Currency Trust (NYSEArca: FXE) dipped 0.1% Tuesday and declined over 4% since the mid-February high. The euro also slipped to about $1.0868.

The depreciating euro boosted automobile companies, which benefit from improved exports on a weaker currency.

“The market and auto stocks are supported by the lower euro,” Stefan de Schutter, a trader at Alpha Trading, told Reuters, adding that upbeat data on China from the Geneva car show also helped.

BMW shares jumped 4.2% after CEO Harald Krueger projected slight sales growth for the year on improving conditions in China and Europe.

The iShares MSCI Germany ETF (NYSEArca: EWG), which includes a 19.8% tilt toward consumer discretionary and a 2.7% position in BMW, advanced 3.6% Tuesday.

Additionally, for hedged Germany exposure, investors can turn to the iShares Currency Hedged MSCI Germany ETF (NYSEArca: HEWG), Deutsche X-trackers MSCI Germany Hedged Equity Fund (NYSEArca: DBGR) and WisdomTree Germany Hedged Equity Fund (NasdaqGM: DXGE). On Tuesday, HEWG rose 3.6%, DBGR increased 3.5% and DXGE returned 3.3%.

Looking ahead, investors are waiting on the European Central Bank’s monetary policy decision next week and the Federal Reserve meeting on March 16.

Deutsche X-trackers MSCI EMU Hedged Equity ETF

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.