Transport stocks up despite lack of progress on trade

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Transportation stocks have recently rebounded, with the asset class trading at the lowest value in a long time. Pre-purchased transportation stocks were first in the list and were followed by bonds, which recently saw their yields fall as risks to the global economy increased. African equities took center stage and were followed by the European common currency, which was hit by a strong dollar and a moderate European central bank. Silver closes the list.

Check out our previous Trends: Trends: Palladium looks at supply shortages and strike fears.

Transport actions

The shares of transport have seen their audience increase by 158% in the last two weeks, their rebound having attracted the interest of investors. The iShares Transportation Average (IYT A) ETF, the leader in this sector, has grown more than 1% over the last 5 days, bringing its cumulative gains to 14%. However, (IYT A), consisting of stocks such as Norfolk Southern (NSC), FedEx (FDX) and Union Pacific (UNP), has the lowest valuation value in ten years, or 13 times the expected earnings of this fund. year.

The low historical valuation may indicate investors' pessimism about the future of the global economy. Transportation stocks are the blood of the trade and investors expect a drop in orders, which indicates potential challenges. A general economic slowdown combined with the backlog of a trade deal between China and the United States and the headwinds of Brexit have dampened investor sentiment. The poor valuation of transport stocks can be an early sign.

US President Donald Trump said he was "in no hurry" to sign a trade deal with China. He reiterated that the White House had asked China to implement structural reforms, including the way in which it treated US intellectual property. He made it clear that no agreement was preferable to any agreement and said he would prefer to close the final details with his counterpart Xi Jinping. The presidents were scheduled to meet at the end of March in Florida to finalize the agreement, but the parties are still negotiating.

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Obligations

Vanguard's bond ETFs are in second place on the list of trends this week, with an audience increase of 139%.

Bonds have recently come to the fore because of the economic slowdown in Europe and the weakness of the US Federal Reserve, which has had the effect of lowering yields. Ten-year US Treasuries are hovering around 2.6%, their lowest level in a year. The decline came after the US Federal Reserve reversed its commitment to raise interest rates this year due to the uncertain macroeconomic environment and lower inflation levels. Treasury securities peaked in November 2018 with a return of 3.2%.

The total Vanguard bond market (BND A), consisting largely of US Treasury bills of various maturities, rose 0.6% in the last five days, bringing cumulative gains to 1.4%. In the future, yields could change course, but with the US economy in its tenth year of expansion and likely to find its way into many parts of the market, cross again the 3% threshold still seems to be a difficult task.

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The story continues

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Africa

Emerging markets have all benefited from a US Federal Reserve, but not from South Africa. The African continent has seen its audience increase by 31% in the past week

The most developed African nation has experienced a series of outflows from its stock market from abroad, due in part to the failure of economic reforms in its country, a stagnant economy and an unstable rand. iShares MSCI South Africa (EZA B +), an ETF that holds shares such as Internet giant Naspers (NPN) and Standard Bank Group ("SBK": https://etfdb.com/stock/SBK: JNB / ), has almost lost 4% in the last four weeks, bringing the losses to 12% by 30%. This compares to a 13.6% decline for iShares MSCI Emerging Markets (EEM A-) over the same period of a year.

So far this year, foreign investors have withdrawn about $ 1.8 billion from the South African stock market, compared to similar inflows of 2018. Prior to 2018, the South African stock market had gone through three outflows consecutive, although none are as big as the one at the beginning of this year.

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euro

The European common currency tends to rank fourth this week with a 30% advance in the number of viewers. Invesco CurrencyShares The European currency (FXE A) has moved widely sideways since the beginning of the year and has lost just over 1%. An accommodating European central bank depreciated the euro, although the intervention of other foreign central banks, including the US Federal Reserve, had the opposite effect.

To boost lending, the ECB has announced its third loan package consisting of two-year loans to help European banks generate more than 720 billion euros of targeted long-term refinancing operations ( TLTRO). The central bank headed by Mario Draghi has also reduced its growth and inflation forecasts.

At the same time, the US Federal Reserve also announced an accommodative stance, excluding almost another rate hike this year.

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money

Silver took last place in the list of trends, with a warm 15% advance in the number of viewers. iShares Silver Trust (SLV C +), the leading silver ETF, has moved widely in the recent past, with investors assessing the strength of the global economy in the face of Europe's slowdown, the central banks of the dovish, and the market challenges. (SLV C +) is up 0.62% since the beginning of the year but was up nearly 5% to $ 15 in mid-February. Money has declined more than 7% in the last 12 months, as the demand for safe haven assets is low. Silver has underperformed its brightest counterpart, gold (GLD A-), since the beginning of the year.

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The final result

The transport shares are trading at low historical valuations, which could indicate difficult times. Bond yields have declined considerably in recent weeks as the US Federal Reserve has revealed its accommodative stance. South Africa has seen large outflows in its stock market, while the euro has suffered from the ECB's lending to European banks. Finally, the money is moved laterally.

By analyzing how you, our esteemed readers, browse our property every week, we hope to uncover important trends that will help you understand the market behavior so that you can refine your investment strategy. At the end of the week, we will share these trends, which will give you a better overview of relevant market events that will allow you to make more useful decisions for your portfolio.

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