The First Trust Eurozone AlphaDEX ETF (Pending:FEUZ) will use the proprietary, rules-based AlphaDEX® fundamental stock selection methodology to select funds from the Eurozone to invest in.
"The AlphaDEX index methodology aims to provide better long-term, risk-adjusted returns than traditional market-cap weighted indices, providing stock selection and weightings based on investment merit, rather than size," said Ryan Issakainen, CFA, Senior Vice President and ETF Strategist at First Trust, in a press release.
Unlike First Trust's current European-focused funds, the First Trust Europe AlphaDEX ETF (NYSEARCA:FEP) and the First Trust Dow Jones STOXX European Select Dividend 30 Index ETF (NYSEARCA:FDD), FEUZ will feature only European companies in the Eurozone; excluding firms from countries like the U.K., Denmark and Switzerland.
Pushing Europe to a sizable rally and sending the euro lower, Reuters says the ECB could decide as soon as this year to begin buying corporate bonds on the secondary market. The move would be an expansion of the ABS buying program launched this week.
"The pressure in this direction is high," says Reuters' source.
The Stoxx 50 (NYSEARCA:FEZ) is up 1.1% and the euro (NYSEARCA:FXE) lower by about 100 pips since the news, now down 0.3% at $1.2765.
Investors yanked $5.7B from European equity funds last week, says BAML, the largest amount on record. The move naturally came as markets headed south alongside investor concerns the ECB won't fire the QE bullet.
In response to a few down days in the market, the Fed this week has trotted out two of its members to suggest continued or even expanded QE, and the ECB let float its intention to provide necessary support to Greek banks. Now the Bank of England has walked back some its hawkishness, with chief economist Andrew Haldane saying he's "gloomier" about the outlook for the U.K. economy than he was a few weeks back, and that rates can likely stay lower for longer.
S&P 500 (NYSEARCA:SPY) futures are ahead 1.3%, Nasdaq 100 (NASDAQ:QQQ) 1.4%, and DJIA (NYSEARCA:DIA) 1%, with earnings from GE, and MS, among others, on tap for before the bell.
Europe's Stoxx 50 (NYSEARCA:FEZ) is up 1.2%, led by Spain.s 1.75% gain.
The 10-year Treasury yield is higher by four basis points to 2.2%, and gold is down $3 per ounce to $1,237.50.
For anyone who fondly remembers the days of 2010-12 when Eurocrats would step into steep market declines with leaks about some sort of new support program ... they're back. Down about 3% yesterday and 3% earlier in the session, the Stoxx 50 (NYSEARCA:FEZ) has rebounded to a loss of just 1.2% as the WSJ reports on a new ECB liquidity operation for Greece's banks.
The crash in Greek bonds - the 10-year yield rose to 8.8% earlier from 5.5% a month previous - is temporarily halted, with the yield now down to 7.89%.
The bigger issue, writes Richard Barley, is dashed hope of the country exiting its bailout program, and thus the possible rise to power of the anti-bailout Syriza party. Past bouts of falling bond prices have been signals to traders to step in and await central bank support. Is that prop now gone, asks Barley. It appears he has his answer.
S&P 500 (NYSEARCA:SPY) futures are down 1.2% and Nasdaq 100 (NASDAQ:QQQ) by 1.25%, led by a 26% premarket dive in Netflix following its Q3 results.
Europe's plunging for a second consecutive day, the Stoxx 50 (NYSEARCA:FEZ) -2.2%, led by Spain's IBEX 35 (NYSEARCA:EWP) off 2.9%, and Asia was lower across the board overnight, led by the Nikkei's 2.2% decline.
Treasurys are the most volatile asset of all for a 2nd straight day, the 10-year yield off a whopping 12 basis points to 2.02%. Gold catches no bid for now, down $2 per ounce to $1,242.
Europe's Stoxx 50 (NYSEARCA:FEZ) is lower by 3.5%, led by a 3.7% and 3.6% declines in Italy (NYSEARCA:EWI) and Spain (NYSEARCA:EWP), respectively.
Germany (NYSEARCA:EWG) is down 3% and France down 3.5%.
In what may go down as one of the more notorious cases of herd behavior ever, traders have been buying the government paper of Europe's periphery with the same fervor as that of the core. That's changing today, and Italian and Spanish sovereign yields are on the rise as those in Germany tumble to new record lows.
The German ZEW survey of investor confidence has unexpectedly dropped into negative territory for the first time in almost two years, tumbling to -3.6 in October from 6.9 in September and missing expectations of 1.
The current situation print has slumped to 3.2 from 25.4, falling short of consensus of 18.
Sentiment for the eurozone plunged to 4.1 from 14.2 and missed forecasts of 7.1.
"Geopolitical tensions and the weak economic development in some parts of the Eurozone, which is falling short of previous expectations, are a source of persistent uncertainty," says ZEW President Professor Clemens Fuest. "These factors are tarnishing growth expectations in Germany. Disappointing figures concerning incoming orders, industrial production, and foreign trade have likely contributed to the growing pessimism among financial market experts." (PR)
The DAX is -0.5% and the euro is -0.8% at $1.2653.
We've seen this movie before. The ECB floats the need for unconventional stimulus measures, and the Germans object, and then the Germans strenuously object. and then the plan moves forward anyway.
“There is a risk of monetary policy, especially in the euro area, being held hostage by politics,” Bundesbank chief Jens Weidmann tells the WSJ, unsurprisingly not pleased with the ECB's decision to begin buying ABS, and fiercely opposed to what could be the next step - full-out QE with the mass purchases of government paper.
Weidmann is but one member of the 24-person ECB governing council. While somewhat influential, he cannot veto any decisions and has been overruled by the majority in the past.
European stocks are at session lows, the Stoxx 50 (FEZ -1.6%), Italy (EWI -1.5%), France (EWQ -1.7%), Germany (EWG -1.1%), Spain (EWP -2%).
The purchases, says Draghi, will last for at least two years and have a "sizable" impact on the ECB's balance sheet.
"This program is orientated to boost lending to SMEs (small and medium-sized enterprises)," said Draghi, adding that those assets targeted will be "simple and transparent."
Traders sold euros on the news, but have since bought them back and the currency is flat vs. the dollar on the session at $1.2654. European shares resume sliding, the Stoxx 50's (FEZ -1.8%) decline led by a 3.7% dive in Italy.
The Ifo's Business Climate Index falls to 104.7, less than projected and the lowest read since April of last year. Expectations hit their lowest level since December 2012, according to Ifo chief Hans-Werner Sinn.
"The German economy is no longer running smoothly," says the Ifo
The weak print seems to have boosted expectations for more from the ECB, as the euro (NYSEARCA:FXE) slumps 0.2% and European stocks (NYSEARCA:FEZ) gain 0.5%. Germany's DAX (NYSEARCA:EWG) edges up 0.1%.
A check of European closing prices finds the euphoric early reaction to the "No" vote from Scotland mostly faded by day's end. The Stoxx 50 (NYSEARCA:FEZ) closed just 0.2% higher, with the U.K.'s FTSE 100 (NYSEARCA:EWU) gaining 0.3%.
Looking at U.K. bank ADRs: RBS (RBS +1.2%), Barclays (BCS -0.9%), Lloyds (LYG +0.5%), HSBC (HSBC -0.2%).
Dealing with its own separatist movement, Spain (NYSEARCA:EWP) managed just a 0.1% gain.
The ECB cut its growth forecast for the EU for 2014 and 2015, says Mario Draghi at his post-meeting press conference, but raised its outlook for 2016. Inflation is seen at lower-than-expected levels in the coming months before increasing gradually in 2016.
The central bank, says Draghi, will start to purchase a broad portfolio of euro-denominated covered bonds and also begin to buy ABS, with further details coming in October. It sounds like the Germans are on board: "Should it become necessary, the Governing Council is unanimous in using additional measures."
The Stoxx 50 is now higher by 1.5% and the euro lower by 1% to $1.3015.
The SPDR® EURO STOXX 50® ETF, before expenses, seeks to closely match the returns and characteristics of the EURO STOXX 50 Index Fund (ticker: SX5U). Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
See more details on sponsor's website