Market Overview

Materials, Europe And China ETFs To Watch This Week

Materials, Europe And China ETFs To Watch This Week

The upcoming week will once again signal the start to earnings season, which will be kicked off by Alcoa Inc (NYSE: AA) on Wednesday.  The quarterly results will be a welcome distraction for U.S. investors from the pessimistic headlines in overseas markets.

In addition to earnings announcements, key economic events to watch will include: FOMC minutes, weekly jobless claims, and wholesale inventories.

Here are the key ETFs to watch for the week of July 6:

Materials Select Sector SPDR ETF (NYSE: XLB)

Basic materials stocks will certainly be in focus this week as aluminum producer Alcoa releases their latest fiscal results.  This stock is represented in the sector benchmark XLB, which tracks 31 large-cap chemical, mining, and materials companies.

This ETF just recently fell below both its 50 and 200-day moving averages and is trading near the flat-line for the year.  Many of the underlying stocks in this sector are likely feeling the bite from a stronger U.S. dollar and weak global commodity prices.  

Nevertheless, XLB has the potential to reverse its recent losses if Alcoa can muster a positive story for this embattled sector.  

iShares Europe ETF (NYSE: IEV)

While the Global X FTSE Greece 20 ETF (NYSE: GREK) has been a core focus for international investors, the fiscal fallout in other areas of Europe is a concern as well.  ETF investors would be well-served to keep an eye on IEV, which has $2.9 billion dedicated to 355 stocks of developed European nations.

The United Kingdom, France, Switzerland, and Germany make up the top four country allocations in IEV.  Despite strength in the first half of 2015, IEV recently fell to new 3-month lows and further friction or uncertainty with Greece in the coming week may threaten its year-to-date gains.

Deutsche X-trackers Harvest CSI 300 China A-Shares ETF (NYSE: ASHR)

The continued destruction in China’s stock market has reached critical mass as top brokerage companies band together to try and stabilize plummeting equity valuations.  ASHR tracks the 300 largest and most liquid China A-share stocks traded on the Shanghai and Shenzhen exchanges.

This ETF is down over 22 percent from its recent high in just a few short weeks and has yet to show signs of a bottom.  Investors will be closely watching if the new crisis efforts can positively impact broad-based China indexes such as ASHR in the coming week.


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