U.S. markets were lackluster Monday and lost ground despite inflation numbers that year on year brought the rate back down to 2.1% and closer to the Fed's 2% comfort zone. This leaves the door a bit open for the Fed to ease rates. The Dow, S&P 500, and Nasdaq coming into today's action with respective gains of 6.2%, 5.2%, and 5.6% for April but investors got cold feet today pondering valuation levels and wondering if all the good profit numbers were already in share price levels. The Dow lost 0.44%, Nasdaq lost 1.26% and the S&P 500 0.78%.
In overseas markets, the Shanghai Composite bucked a down day in Asia rising 2.19% and Singapore gave up 1.1%. Canada caught a cold from US falling 1.53% for the day. In Europe, prices were generally up with Sweden picking up 0.62% while Austria lost 1.48% for the day. I don’t see how commentators can say that global markets all move together. Today is a typical day where market move to their own beat.
Merger activity is one reason European markets are staying strong even with the headwind of rising interest rates. The Swiss Nestle company will buy the Gerber baby-food business from the Swiss pharmaceutical multinational Novartis in a $5.5 billion all cash deal. Barclays Bank PLC of Britian bid $91 billion for the Netherlands' largest bank ABN Amro NV. French leading retailer Carrefour is aiming to become the same in Brazil by buying Atacadao and British pharma AstraZeneca is buying US based MedImmune for $16 billion .
Utility ETFs have surpassed the Real Estate sector as the top performing sector since January 2006. Each of the five ETFs is up in excess of 29% over the last 15 months. IShares DJ Utility Sector Index fund (IDU) leads the way with 33.60%. Vanguards Utilities Vipers (VPU) is close behind with 33.58%. The sector as a whole is up 31.98%.
The Chartwell ETF Advisor’s strategy of playing Chinese and Asian growth through Southeast Asia is working fairly well. Unlike the conventional wisdom that China hurts this region, Chinese growth has actually helped them grow faster and many manufacturers and investors do not want their investments and facilities centered on just China but wish to spread the risks.
Van Eck Global expects to launch the Russia ETF (RSX) is anticipated to launch today, Monday, April 30th. RSX is based on a basket of 30 Russian equities which track the DAXglobal Russia + Index (DXRPUS). The Index includes 5 U.S. listed ADRs, 19 London GDRs and 6 local Russian ordinaries. RSX has a management fee of 69 bps. The other is a Global Alternative Energy ETF (GEX) which is anticipated to launch on May 9th with management fees of 65 bps. GEX is based on the Ardour Global Index extra-liquid (AGIXL) which contains 30 Alternative Energy stocks from around the world.