The global stock market had a shaky start to Q4. Bad news was rampant in almost all key nations pushing the S&P 500 to end the trading below its 200-day moving average on October 13. The Nasdaq Composite also shed about 8.6% from its September highs, per CNBC.
The end of QE stimulus in the U.S. this month, the Eurozone’s possibility of entering into a triple-dip recession, the sluggish Japanese economy and outbreak of Ebola virus spread jitters among investors.
The nervousness was so acute that investors completely ignored the much-needed boost received by the Chinese economy. Notably, China, which has been staging downbeat performances since the start of the year, came up with better-than-expected trade number for September.
In any case, the past few days have been choppy for the U.S. market. Investors were dumping high growth and high beta stocks thanks to valuation concerns, profit-taking activity, fears of a cease in cheap dollar inflows and some sluggish global economic indicators. But the latest rout was instigated by the massive sell-off in technology stocks and lackluster German trade data.
The semiconductor space which has been investors’ darling in the overall technology sector this year, had a blood bath on October 10 as Microchip Technology Inc. (MCHP) came up with a downbeat second-quarter fiscal 2015 preliminary net sales report on October 9 and also raised some concerns about the future of the sector.
Also in Europe, the biggest decline in German industrial output since 2009 for the month of August gave cues that the Euro zone’s largest and most stable economy is deteriorating. Not only this, the Eurozone’s business grew at the slowest rate this year in September.
Investors appeared to take these data at face value and rushed toward fear-induced selling. The sudden elevation of the risk quotient in the market brightened the appeal for safe haven assets. Volatility ETFs which track the implied volatility of the market also surged thanks to the massacre in the stock market and concerns about a further downturn (read: 3 Attractive Value ETFs to Buy After Market Selloff).
This specifically caused the uptrend in a few segments of the financial world that had been seeing dire trending as of late, but now might be promising. Below, we highlight a few of the biggest gainers from the latest sell-off in the global stock market. Also, these ETFs may continue to shine should tensions persist in the global economy in the near term.
Gold is often viewed as a hedge against market risk. The precious metal had been through a brutal stretch in Q3 thanks to the rising greenback and reduced demand from the major consuming nations like China and India. The metal has seen some strength lately thanks to this market turmoil.
The ETF tracking gold bullion SPDR Gold Shares (NYSEARCA:GLD) has added more than 1.8% in the last five days (as of October 13). Apart from the rising tension in the market, the Fed’s latest comment of keeping the interest rate low for a ‘considerable’ period helped GLD to get back some of its lost strength.
The Japanese currency yen is another asset class which is considered as a safe haven. Despite the bank of Japan’s relentless effort to keep the currency weaker, yen has gained strength lately. Japanese yen touched one-month high with respect to the greenback and 11-month high relative to the euro on October 13. As a result, the ETF tracking the yen – CurrencyShares Japanese Yen ETF (NYSEARCA:FXY) – added about 1% during the last five days (as of October 13).