European ETFs sell-off as Euro indices plummet amid interest rate hikes

Jun. 16, 2022 11:34 AM ETVanguard FTSE Europe ETF (VGK), EZU, EWP, EWGEWO, EPOL, EWD, EWQ, EDEN, EWI, EWL, EWUBy: Jason Capul, SA News Editor1 Comment

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European ETFs encountered a wave of sellers in the early part of trading Thursday, with European indices like the FTSE 100, German Dax, CAC 40, FTSE MIB and others falling some 2%-3%.

The U.S. Federal Reserve's decision to raise rates by 75 basis points has had a degree of an effect on Euro-based funds. At the same time, the region was hit by more local central bank decisions, with rate hikes also coming from the Bank of England and Swiss National Bank.

On Thursday, the BoE raised its benchmark rate by 25 basis points to 1.25%. Also, the SNB executed an unexpected 50 basis-point interest-rate hike to -0.25%. Furthermore, this was the first hike by the SNB in 15 years. The Swiss central bank has maintained negative interest rates since 2015.

As central banks' focus on global inflation, a selloff has started to take place and European ETFs have been caught in the mix.

The Vanguard FTSE Europe ETF (NYSEARCA:VGK), which is the world's largest European exchange traded fund with over $17B assets under management, and its close competitor fund iShares MSCI Eurozone ETF (BATS:EZU) have both slipped into the red. VGK and EZU have fallen by 2.4% and 2.7%, respectively.

While VGK and EZU declined in early trading, they are not the only ETFs to do so. See below ten other funds that have a country-specific focus along with their daily performance.

  • Austria: iShares MSCI Austria ETF (EWO) -3.9%.
  • Poland: iShares MSCI Poland ETF (EPOL) -4.7%.
  • Spain: iShares MSCI Spain ETF (NYSEARCA:EWP) -0.5%.
  • Sweden: iShares MSCI Sweden ETF (EWD) -3.5%.
  • France: iShares MSCI France ETF (EWQ) -2.1%.
  • Germany: iShares MSCI Germany ETF (NYSEARCA:EWG) -3.2%.
  • Denmark: iShares MSCI Denmark ETF (EDEN) -2.8%.
  • Italy: The iShares MSCI Italy ETF (EWI) -2.8%.
  • Switzerland: iShares MSCI Switzerland ETF (EWL) -0.4%.
  • U.K.: iShares MSCI United Kingdom ETF (EWU) -1.9%.

Coming to the United States and investors will notice that benchmark exchange traded funds that track the three major averages have all plummeted as well.

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