Tuesday ETF Roundup: EWJ Continues Slide, GDX Soars on Gold's Record Price

Includes: EWJ, GDX
by: Eric Dutram

U.S. equity markets finished the day mixed as the gains that most experienced in the early part of the session soon evaporated to close out Tuesday trading. The Dow finished down six points while the S&P 500 slid by less than one point. The Nasdaq, however, did manage to finish in positive territory, pushing ahead by two points on the day. Commodity markets were mixed as well: oil and most soft commodities finished flat although there were some heavy gains in coffee, cotton and precious metals. Silver and gold both gained more than 1.6% on the day, as the yellow precious metal pushed to a fresh all-time record as safe haven buying surged on news of a Chinese rate hike. Interestingly, traders did sell off some of their Treasury bond holdings as well, as yields pushed up across both the two and 10 year notes, suggesting that investors seeking safe haven investments are increasingly looking to precious metals over bonds.

One of the biggest losers on the day was iShares MSCI Japan Index Fund (EWJ), which tumbled by 2% during Tuesday trading. Today’s fall represents yet another bad day for the popular Japan ETF as fears over the nuclear disaster at the Fukushima plant continue to plague the Japanese economy. While the nuclear crisis continues to hang over the nation, most of the losses were largely attributable to the country’s important auto industry, which for the first time expressed concerns over supply shortages that resulted from the quake. In the report, Toyota (NYSE:TM) revealed that it would be forced to shutdown all of its North American factories due to parts shortages from the quake and tsunami. Analysts expect that similar issues will also strike other large car markers in the country such as Hyundai (OTCPK:HYMLF) and Nissan (OTCPK:NSANY), causing all three to sell off by more than 2% on the day and pushing EWJ to yet another session of losses.

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One of the biggest winners in the ETFdb 60 was the Market Vectors Gold Miners ETF (NYSEARCA:GDX), which surged by 5% on the day. Today’s gains came as gold surged to a fresh all-time high, finishing the day close to the $1,460/oz. mark. Traders scooped up the precious metal in a round of safe haven buying as a number of geopolitical events, as well as a possible slowdown in China, helped to boost demand for the yellow metal. “The support for prices is largely attributable to persistent global uncertainty in the form of the ongoing conflict in Libya, a renewed focus on the European sovereign debt situation and a stronger oil price that has stoked fears over global inflation,” Standard Bank precious metals analyst Marc Ground said in a note to clients. Ironically, the surge came on the anniversary of President Franklin D. Roosevelt’s executive order which forbid U.S. citizens from owning gold, adding extra insult to those who have opposed the "barbaric relic" in the recent past despite its record run.

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Disclosure: No positions at time of writing.

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