Monday, February 3, 2020

Worsening Fears

Monday, February 3, 2020 - Growing uncertainty over the scope of the economic impact of the coronavirus outbreak rippled through the markets this week, sending stocks to their largest weekly declines since October and erasing this year's gains. As the outbreak continued to escalate, the World Health Organization officially issued a global public health emergency. These mounting concerns spurred a rally in safe-haven assets, while growth-sensitive assets like stocks and commodities plunged.

Against this backdrop of anxiety, several notable economic events took place - Q4 GDP registered a 2.1% annual growth rate, consumer spending moderated slightly, corporate earnings continued to be largely positive, while the Fed maintained its cautious posture and left interest rates unchanged.

These developments, however, were subordinated by the intensifying coronavirus outbreak and drove the DJIA, S&P 500 and NASDAQ down 2.5%, 2.1% and 1.8% respectively. Despite a strong start to the year, the coronavirus-induced selloff shattered the placid market environment and led all three indexes to experience their worst January performance since 2016.

This backdrop of volatility is reflected in the year-to-date performance of broad asset classes. Equity indexes are largely all in negative territory this year, with the familiar tech heavyweights and income-producing groups like utilities and real estate propping them up from further declines. Trade and global growth-sensitive oil prices are down 13.1% this year, as measured by WTI prices, reflecting the sharpening concerns over the global economic growth trajectory. Gold has advanced 3.9% and long-dated U.S. treasuries are up 6.7%. Taken together, asset class performances to start the year signal a sharp reversal from Q4's sanguine outlook to one of considerably more gloom and uncertainty.

ETFG Quant Movers - Those ETFs who have had the largest weekly change in their respective, overall ETFG Quant ratings.

ETFG Quant Winners: The top five gainers in ETFG Quant Total Score were the First Trust Australia AlphaDEX Fund (FAUS), First Trust Global Wind Energy ETF (FAN), First Trust Consumer Staples AlphaDEX Fund (FXG), iShares MSCI Belgium ETF (EWK), and iShares MSCI Mexico ETF (EWW).

ETFG Quant Losers: The ETF experiencing the steepest weekly declines were the AdvisorShares Vice ETF (ACT), SPDR Portfolio Developed World ex-US ETF (SPDW), Vident International Equity Fund (VIDI), Invesco PureBeta FTSE Developed ex-North America ETF (PBDM), and BMO Elkhorn DWA MLP Select Index ETN (BMLP).

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