ETFs: Price slide brings many ETF sales
Since Friday, tech stocks and technology-heavy indices in particular have been flying out of portfolios - and in a big way. Crypto trackers are also on the sell-off lists.
6 July 2024. FRANKFURT (Börse Frankfurt). The downturn on the stock markets does not stop at ETF trading. Ivo Orlemann from ICF Bank reports "massive redemptions", especially on Friday and yesterday (Monday). Frank Mohr from Société Générale also reported significant selling with extremely high turnover. "We are seeing a lot of selling," says Leo Puschmann from Lang & Schwarz, describing the situation. This also applies to crypto ETNs. According to traders, things are a little calmer today.
Concerns about an impending recession in the US had led to heavy losses on stock exchanges worldwide, especially on Friday and Monday. "That was quite extraordinary", notes Mohr. This was triggered by weak US labour market data on Friday and the escalation of the situation in the Middle East. "A wave of risk aversion has gradually built up over the past week and spilled over from Asia's stock markets to Europe and the USA yesterday," reports Helaba analyst Ralf Umlauf.
“MSCI World less affected”
No segment was spared from the sell-off. "However, tech stocks and technology-heavy indices such as the Nasdaq and S&P 500 were particularly hard hit - not so much the MSCI World or the DAX," explains Mohr. He points out that on a weekly basis - from Monday to Friday - inflows into tech ETFs still clearly predominated. "Investors were obviously still getting in until Thursday."
According to Puschmann, the sell-offs also extend across all sectors. "Asian and especially Japanese stocks were also sold off a lot." Due to the sharp fluctuations, Lang & Schwarz is currently also focusing a lot on volatility trackers, specifically the WisdomTree S&P 500 VIX Short-Term Futures 2.25x Daily Leveraged-ETN (XS2819843736) and the Amundi S&P 500 VIX Futures Enhanced Roll-ETF (LU0832435464). Both have recently recorded strong price gains. At ICF, the Amundi Nasdaq 100 (LU2197908721) as well as the WisdomTree DAX 3x Daily Short (IE00B8GKPP93) have seen some movement. This can be used to bet on a falling DAX with leverage of three.
According to Orlemann, the VanEck Defense (IE000YYE6WK5) and the VanEck Uranium and Nuclear Technologies (IE000M7V94E1) are always in demand. "These are war profiteers."
Mohr
Money market as a haven of peace
Money market trackers remain popular at the moment, as Mohr notes, especially the Xtrackers II EUR Overnight Rate Swap (LU0290358497) and the Amundi EUR Overnight Return (FR0010510800), but also money market-related products such as the iShares USD Treasury Bond 1-3yr (IE00BDFK1573).
Cryptos: everything must go
Cryptocurrencies also recorded heavy losses. Bitcoin slipped below 50,000 US dollars yesterday. By midday on Tuesday, however, it was already back above 55,000 US dollars. "Bitcoin and Ethereum trackers in particular were sold," reports Puschmann. Orlemann also reported many outflows from Bitcoin, Ethereum and Ripple ETNs (CH0454664043). "But people are already buying again today."
There is also a lot going on in gold ETCs such as Invesco Physical Gold (IE00B579F325). "We are seeing buying and selling," says Orlemann. The price of gold is currently at a high level of USD 2,413, but has not been able to benefit from the recent turbulence.
By Anna-Maria Borse 6 July 2024, © Deutsche Börse AG
About the Author
Anna-Maria Borse is a financial and business editor specializing in the financial market/stock exchange and economic topics.
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