Thursday’s ETF To Watch: MSCI United Kingdom Index Fund (EWU)
Jared Cummans: With the second quarter underway, stocks have gotten off to a rough start after a promising opening session. Two straight days of sell-offs sparked fears that Q2 may not fare quite as well as the previous three-month stretch. Many investors were distraught to hear that the Fed has no formal plans for a third quantitative easing program fearing that the U.S. economy may be unable to stand its ground without the helping hand of Ben Bernanke. Today, however, will see the focus of the market’s eye shift across the pond to the U.K. and some important data points that will be released [see also Five ETFs George Washington Probably Would Have Liked].
First and foremost, the U.K. will release interest rates, which are largely expected to hold at 0.50%, the same level they have held since March of 2009. Don’t expect much of a surprise here, however if the central bank were to hit markets with an unexpected figure, it would have a huge impact on trading throughout the day. Second, Britain will also release their manufacturing production data which is slated to fall at 0.1%. This release has been all over the board in recent months, so it would not be surprising to see it post a miss or a big surprise [see also 5 ETF Plays For Doomsday Predictions].
Finally, the U.K. will detail their asset purchases, expected to fall to 325 billion pounds, the same level it has held in the previous two months. A higher than expected result could mean that the government feels that the U.K. economy is in trouble and needs a helping hand, while a lower result could spark optimism for the country. All of these reports will come as the heat turns up on a referendum vote for Scottish independence, a move that could have significant economic ramifications for the UK. Though the vote isn’t slated to happen until 2014, many are calling for a vote sooner rather than later and any kind of news of this matter could have lasting effects on U.K. markets.
In light of all of this data, today’s ETF to watch will be the MSCI United Kingdom Index Fund (NYSEARCA:EWU). This fund is home to over $1.5 billion in assets and trades more than two million times each day. EWU has returned roughly 7% on the year while maintaining a handsome dividend yield of just over 3%. It will be hard to predict this fund’s movement during today’s session, as there are a number of factors that could drive it in either direction. One thing is certain; EWU is due for an active trading session and traders and investors of the ETF should keep a close watch on its movements during the final trading session of this week [see also ETFs For Your Inner Bear].
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