Europe ETFs and investors have seemed to shrug off the S&P “selective default” downgrade of Greece, as major Europe ETFs, including the Vanguard MSCI Europe ETF, the iShares S&P Europe 350 Index Fund ETF, the iShares MSCI Germany Index Fund ETF, the iShares MSCI Italy Index Fund ETF, and the CurrencyShares Euro Trust ETF, all added over 0.3% by the time of writing yesterday.
The Greek downgrade to “selective default” was apparently no worry to ETF investors yesterday, likely because the German Parliament passed the bill necessary to authorize funding for the Greek bailout. Ireland is also set to vote on the new European Union Treaty; the treaty puts tighter fiscal rules for EU member states. Meanwhile, Italian bonds sold yesterday at just over 5% yields compared to 6% yields during the last sale, while the European Economic sentiment report released yesterday indicated further improvement on the continent.
The European Economic Sentiment report was likely the main driver of Europe ETFs' positive move, as the report indicated that “In February, the Economic Sentiment Indicator (ESI) rose for the second month in a row in both the EU and the euro area. The ESI rose by 1.1 points in the EU and by 1.0 point in the euro area, to 93.9 and 94.4, respectively. The improvement was broad-based across all sectors except for services, where a decrease in confidence partly offset the rebound observed in January.” Read The Full Report
Europe ETF Summary
Vanguard MSCI Europe ETF (NYSEARCA: VGK), which corresponds to the MSCI Europe Index measuring the large-cap and mid-cap companies of major European countries, had risen 0.48% so far yesterday at the time of writing.
iShares S&P Europe 350 Index ETF (NYSEARCA: IEV) corresponds directly with the Standard & Poor’s Europe 350 Index that tracks the performance of stocks of companies in European countries. NYSEARCA: IEV had also risen 0.43% so far yesterday.
iShares MSCI German Index Fund ETF (NYSEARCA: EWG), which duplicates the MSCI Germany Index fund that tracks the performance of German companies, has risen almost 0.9% so far yesterday.
iShares MSCI Italy Index Fund ETF (NYSEARCA: EWI) tracks directly with the MSCI Italy Index, which follows the performance of major Italian companies. NYSEARCA:EWI had also added 0.74%.
CurrencyShares Euro Trust ETF (NYSEARCA: FXE): This ETF tracks directly with the price and performance of the Euro dollar, and NYSEARCA:FXE had so far risen nearly 0.4% yesterday.
Bottom Line: It appears that Greece is in the rear view mirror for now as Germany, the EU, and the IMF have taken care of the Greek contagion. With Ireland set to vote on the new EU fiscal treaty, Italian bonds being sold at record low prices, and a positive European economic sentiment report, perhaps Europe really saved itself again. Whether these saves are band-aids or real solutions to the problems are still unknown, however for now at least Europe has stepped away from the cliff.
Disclaimer: Wall Street Sector Selector trades a wide variety of ETFs and positions can change at any time.