We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bearish
Oil - US Crude
Mixed
Wall Street
Bullish
Gold
Bearish
GBP/USD
Mixed
USD/JPY
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • US equities continue to run higher with the Nasdaq 100 setting a fresh all-time-high, not even three months after giving back almost a third of its value in about a month. Get your #Nasdaq technical analysis from @JStanleyFX here: https://t.co/1LI54uvI8x https://t.co/e9FvSLqfaA
  • The US Dollar may be at risk to losses against some of its #ASEAN counterparts. USD/SGD, USD/PHP, USD/MYR and USD/IDR have recently broken to the downside. Will losses continue? Find out from @ddubrovskyFX here: https://t.co/0RTlj6maTT https://t.co/UyQ4i0AihI
  • The British Pound technical outlook still seems to favor the downside. GBP/CAD may pressure key rising support from August as GBP/AUD could prolong its downtrend. GBP/CHF may fall. Get your $GBP market update from @ddubrovskyFX here: https://t.co/hBOpDKXmfW https://t.co/AJlT2YKeCu
  • USD/JPY is approaching medium-term uptrend resistance and while the outlook remains constructive, the advance may be vulnerable near-term while below confluence resistance. Get your $USDJPY technical analysis from @MBForex here: https://t.co/93D7AyhHtG https://t.co/KQcLLrkMP3
  • AUD/USD has had the most impressive show of trend over the past couple of months with the pair gaining almost 1500 pips from the March low. Get your $AUDUSD technical analysis from @JStanleyFX here: https://t.co/vLz4Rpln3u https://t.co/AOwnJja5V8
  • Has the #Euro been saved? Find out from @CVecchioFX here: https://t.co/eiXfOTyGa6 https://t.co/AyRiYpb4cN
  • U.S. Market Analyst at https://t.co/JsVsSmefgR, Shain Vernier covers - ✔️ Safe haven assets in volatile markets ✔️ Central banks and governments ✔️ How will commodities trade in a recession Only on Trading Global Markets Decoded #podcast. Tune in here: https://t.co/1UmEzEbwiy https://t.co/ygwjGNvS61
  • The $USD, Euro, British Pound and Australian Dollar will all be at the mercy of political developments in Asia, Europe and North America this week. An avalanche of PMI data will set the backdrop. Find out from @ZabelinDimitri here: https://t.co/L8cfAgVx94 https://t.co/THWhPAS6AM
  • The price of #gold plunged 1% immediately after the stunning US jobs report crossed the wires. Get your market update from @RichDvorakFX here: https://t.co/8i0L6YIqjy https://t.co/y9dIXazJf9
  • S&P 500, Dow Jones, Nasdaq explode higher with stocks surging in response to shockingly better-than-expected monthly jobs data. Get your #equities market update from @RichDvorakFX here: https://t.co/nuMVWOzzuC https://t.co/M3nGBjd7kZ
US Equities Rebound but Defensive, Low-Risk Funds see Robust Inflows

US Equities Rebound but Defensive, Low-Risk Funds see Robust Inflows

2018-12-01 16:30:00
Peter Hanks, Analyst
Share:

Talking Points:

  • SPY, IVV and VOO funds saw assets under management balloon by $7.5 billion this week
  • Short-term government bond ETFs also saw substantial inflows as credit spreads shrink
  • Defensive sectors like healthcare saw a surge in demand, suggesting some investors see a sustained downturn

Dovish Fed Drives Equities Higher

Domestic equity markets posted a strong performance this week with each of the main indices recording gains. A series of statements from Federal Reserve Chairman Jerome Powell, which the market understood to be dovish, propelled stocks higher on Thursday. It is likely not all investors were convinced by the recent bout of equity strength and remain on the sidelines until the conclusion of the G20 summit in Buenos Aires. Still, the three largest broad index tracking exchange traded funds (ETF) saw substantial inflows and the S&P 500 notched its best weekly performance since December 2011.

S&P 500 Price Chart Daily, Year-to-Date (Chart 1)

US Equities Rebound but Defensive, Low-Risk Funds see Robust Inflows

Learn to day trade the S&P 500..

The ETF mega-cap trio of SPY, IVV and VOO posted aggregate inflows totaling $7.5 billion this week. The inflows are the largest weekly increase since late September where the funds saw their assets under management increase by $11.5 billion. It seems many investors were able to capture the strong performance of the indices this week but some shied away from the volatility and favored more conservative funds.

Aggregate Fund Flows for Broad Market ETFs versus S&P 500 Performance (Chart 2)

SPY, VOO, IVV etf fund flows

Short-Term Government Bonds see Consistent Demand

The funds BIL and SHY, which track the return of short-term government bonds, saw substantial inflows this week and recorded the highest single-day inflow in the last year. Together, the two funds have seen $3.7 billion in fresh funds in the month of November. The broad bid likely comes from the attractive risk-return profile they offer. Their effectively risk-free return around 2.25-2.50% is proving hard to pass up for many investors given the recent volatility and uncertainty. The demand for a relatively low-risk positions was echoed by flows into the healthcare sector.

BIL and SHY ETF Fund Flows (Chart 3)

US Equities Rebound but Defensive, Low-Risk Funds see Robust Inflows

Healthcare ETF Exposure Climbs

Exchange traded funds that provide exposure to healthcare stocks (XLV, VHT, XBI) also saw notable inflows this week. Seen as a non-cyclical and thus defensive industry, many investors dive to healthcare shares in times of uncertainty or broad market underperformance. The three funds saw $325 million in fresh capital this past week alone. Their inflows suggest some investors are still weary of equity performance or perhaps stability which is unsurprising given the huge event risk this weekend.

XLV, XBI, VHT ETF Aggregate Fund Flows (Chart 4)

US Equities Rebound but Defensive, Low-Risk Funds see Robust Inflows

View our Economic Calendar for data releases due this week and next.

As for the week ahead, the headline event will be the conclusion of the G20 summit this weekend and subsequent trade deals or escalations which will play a significant role in the performance of equities next week.

As for data releases, US manufacturing will be a figure to watch on Monday as well as Fed Chairman Powell’s address to the Joint Economic Committee on Wednesday. Later in the week, unemployment data from the US and Canada is due along with a Bank of Canada rate decision.

Read more: Fed’s Financial Stability Report Warns of ’Elevated’ Corporate Debt

--Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

DailyFX forecasts on a variety of currencies such as the US Dollar or the Euro are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.