China's Tightening, McDonald's Earnings Lift ETFs

Includes: ADRA, FXI, PBJ, SGOL
by: Tom Lydon

Exchange traded funds (ETFs) edged higher at the open on Tuesday as Wall Street extended its advance on strong corporate earnings and more belt-tightening from China.

  • China’s central bank raised interest rates for the second time in just over a month in a bid to dampen high inflation and guide blistering economic growth to a sustainable level. Its last rate hike came on Christmas Day, when the bank raised both benchmark rates by a quarter point. China’s leaders have sought to cool surging inflation that could pose a threat to political stability. iShares FTSE/Xinhua China 25 (NYSEArca: FXI) is up just slightly this morning.
  • Toyota Motor Corp. (NYSE: TM) share rose over 4% on Tuesday after raising its profit and revenue forecasts for the full fiscal year through March, even though a strong yen and weak domestic car sales took a toll on the latest quarter. PowerShares BLDRS Asia 50 (NYSEArca: ADRA) is up 0.3% so far this morning; Toyota is 9.2% of the ETF.
  • Shares of McDonald’s Corp. (NYSE: MCD) are up over 2% on Tuesday after saying global comparable sales increased 5.3% last month. By region, the restaurant chain said comparable sales in the U.S. rose 3.1%, while sales increased 7% in Europe and 5.2% in its and Asia/Pacific, Middle East and Africa business. The PowerShares Dynamic Food & Beverage ETF (NYSEArca: PBJ) is up slightly in early trading; McDonald’s is 4.7%.
  • After weeks of flat performance, gold futures surged to a two-week high on China’s interest-rate moves. ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) is up more than 1% this morning.

Gregory A. Clay contributed to this article.