ETF Weekly Market Update

Flows, Market Snapshot and Axes…

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On Exchange Equity Turnover:

– Values above 100% indicate an above average turnover compared to either the prior 30 trading days or the prior 260 trading days.
– The chart on the right hand shows a strong positive correlation between increased volatility and UniCredit’s ETF OTC turnover inthe past 2.5 years. 100% indicate the average turnover during this time. As soon as volatility increased the turnover edged up to three times the average turnover.

UniCredit OTC ETF Turnover Last Week

Last weeks trading activities were slightly below average. We saw some huge buy orders in MSCI World Products as well as in Asien Emerging Markets. On the other side US-Treasury Bonds and Physical Gold ETCs were on the selling list of our investors.

Market Comments

– Macro versus micro and a shift of the focus of risk from the EMUto the US dominated financial markets over the past week. Disappointing macro indicators in the US caused investors to become more fearful of a double-dip scenario. The Minutes of the 23 June FOMC meeting reinforced the perception that the economic upswing has lost power. Fed members were biased towards downside risks to growth. A few participants cited some risk of deflation. The Committee members seemed to be toying with the idea of a renewed wave of quantitative easing. This assessment stands in stark contrast to the outlook presented by the ECB one week ago: While the recovery is clearly more robust in the US than in the EMU, the ECB sounds cautiously more optimistic and does not at all envisage providing additional policy stimulus. Having said this, risky assets ended the week on a much weaker note on the back of fears of a sharper-than-expected economic slowdown, while EUR-USD moved up strongly. – This week’s focus will be on the EU banking stress test. Country-aggregated results will be published on Friday. A detailed breakdown is expected over the subsequent two weeks. The questions are whether a) the (still unknown) parameter of the stress test and b) the results meet expectations or not. The stress test can be seen as a make-or-break challenge for market sentiment towards the EMU. Further highlights over the comings days will be Fed Bernanke’stestimony, data on the US housing market, the ifoindex release and almost 130 earnings reports in the US.

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Corporate & Investment Banking
UniCredit Bank AG
Arabellastr. 12 D-81925 München

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Source: ETFWorld – Corporate & Investment BankingUniCredit Bank AG