ETF Outlook for Wednesday February 12, 2014 (EWU, FXI, EWA, CARZ, F)

ETF Outlook for Wednesday February 12, 2014

iShares MSCI United Kingdom Index ETF EWU

The Bank of England increased the country’s GDP forecast for 2014 to 3.4 percent from a previous estimate of 2.8 percent. The central bank based its decision on reduced uncertainty and falling unemployment. They also said they will keep interest rates low until unemployment falls to at least 7 percent. The FTSE in London was up after the announcement, but has since fallen back to the breakeven level. EWU is trading 3 percent off a multi-year high after rallying 5 percent in the last week.

iShares FTSE/Xinhua China 25 Index ETF FXI

China exports grew by 10.6 percent in January well above the estimate of 2 percent. Imports followed the same trend with a gain of 10.0 percent, easily beating the estimate of 3.0 percent. The numbers point to two positives: demand for goods around the world is strong and demand for goods within China is also robust. The news should help ease fears of a hard landing in China for at least a few days or until the next economic number hits the wires. FXI is a basket of 25 large Chinese stocks that rallied 3.8 percent yesterday after hitting a 7-month low last week.

iShares MSCI Australia Index ETF EWA

The Australian stock market rallied on the positive news out of the U.S. yesterday as well as the bullish Chinese economic data that hit the wires last night. This was in spite of the country’s consumer confidence falling for the third straight month as the fears of a jobless recovery continue to weigh on the population. EWA was able to close at a one-month high yesterday after rallying 2.4 percent. The new high comes after the ETF hit a 7-month low last week as the China slowdown fears stretch to the commodity-rich island nation.

First Trust Global Auto ETF CARZ

Ford Motors F, one of the largest holdings of CARZ reported that sales in China in January came in better than expected. The company announced it sold 94,500 vehicles in China during January; this is a 53 percent increase from one year earlier. Passenger car sales increased by a whopping 63 percent last month. CARZ has been able to storm back from a wave of negative news that hit the global auto sector in January and the ETF is on the verge of recapturing its 50-day moving average. A close above $41/share would be the major breakout needed for the ETF.