Last week was a slow period for U.S. markets, with exchanges taking some down time for the Thanksgiving holiday. With investors returning from the long weekend away, the upcoming week has historically been a busy one; there is additional data to digest, especially since international markets plowed ahead as Wall Street took a few days off.
Unfortunately, the holiday did little to ease any of the concerns that have been weighing on global markets in recent weeks; jobless rates in the U.S. are still a major issue, and Europe’s debt crisis is beginning to spiral out of control. Add to that a fresh surge in geopolitical tensions in the Middle East, and we have the makings of an eventful week in financial markets. The coming week has no shortage of data releases, and trading volumes are expected to be heavy throughout. A few asset classes in particular should experience a fair amount of volatility, which could create opportunities for investors:
SPDR S&P Retail ETF (NYSEARCA:XRT)
XRT In Focus: The coming weeks will be a critical stretch for XRT, as many of this ETF’s components derive a substantial portion of their revenues during the final five weeks of the year. Reports of Black Friday activity are already beginning to trickle out, and more complete insights into the shopping activity in the last week should follow throughout the course of the week. Last year retailers topped modest expectations, pushing this sector to a strong finish in 2010. This year there is considerable uncertainty over consumer appetite for holiday spending; a pleasant surprise in receipts could boost XRT, while disappointing figures may sink this ETF [see Shopping For A Retail ETF].
XRT is linked to an equal-weighted index comprised of close to 100 different retail companies, including both online-focused firms and traditional brick-and-mortar stores. While focused exclusively on the retail sector, the portfolio is balanced across this asset class; XRT holds apparel companies, specialty stores, auto retailers, department stores, computer and electronics companies, and catalog retailers.
Market Vectors Egypt ETF (NYSEARCA:EGPT)
EGPT In Focus: When Hosni Mubarak was pushed from power earlier this year, investors around the globe hoped that the path towards a prosperous future had finally been cleared after decades of human rights abuses and economic mismanagement. But the transition in one of Africa’s largest markets has been anything but smooth, as the last week has been marked by a number of increasingly violent protests. The wave of uncertainty that has suddenly washed over Egyptian markets dealt another blow to EGPT, which is already one of the worst performers among all equity ETFs during 2011. EGPT shed more than 6% on Monday of last week and followed with another steep decline during Tuesday’s trading session. Over the last two weeks, EGPT has shed more than 15% of its value.
Egypt’s military has agreed to speed up the process of transferring power to a civilian government and the Prime Minister of the civilian government agreed to step down as well. If the protests subside in Cairo and throughout Egypt, the ETF could be poised to bounce back from a dismal performance over the last week. But it seems unlikely that we’ve seen the last of the chaos here; ongoing political uncertainty could continue to weigh on EGPT in coming sessions.
Global X Auto ETF (VROM)
VROM In Focus: After being pushed to the bring of bankruptcy during the recent recession, the U.S. automotive industry has made an impressive comeback that was continued last month with stellar results from several manufacturers. November results will be forthcoming late this week, and investors will be anxious to see if carmakers were able to build on the stellar October results. Coming days will also shed some light on incentive plans being rolled out during the holiday seasons; if dealerships are able to resist deep discounting to move inventory, it could be a promising sign for Q4 profitability.
VROM maintains a global focus, including both domestic automakers and those with a focus on operations in emerging economies throughout Asia and South America. This ETF has struggled during the past six months, losing close to a quarter of its value. But another strong month of sales could help VROM get back on track.
Disclosure: No positions at time of writing.
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