ETFs we’re watching for Thursday, April 12, 2012

The Department of Labor’s weekly report on initial unemployment claims turned out to be a huge disappointment, which could challenge Thursday morning’s bullishness resulting from upbeat trading activity in China, Japan and Europe.  Although surveys on economists’ expectations did anticipate an increase in claims, the figures discussed ran from 355,000 – 359,000 new claims.  The Department of Labor reported that those expectations undershot the actual headline number by more than 21,000 – with the weekly total at 380,000 new claims.

In Europe, there was enough good news to keep stock indices in positive territory.  Italy successfully auctioned €4.88 billion of debt, although the yield jumped to 3.89 percent, a rate significantly higher than anticipated economic expansion (NYSEARCA:EWI).  Consumer prices in France rose 0.8 percent month-over-month in March, and annual core inflation climbed 1.6 percent (NYSEARCA:VGK).  Britain reported some bad news, as the nation’s trade deficit widened to £8.77 billion in February.  The nation’s declining machinery and automobile exports to the United States, China and Russia were to blame.

In Asia, Japan’s Nikkei 225 Stock Average ended an eight-day losing streak following a pledge by Bank of Japan Governor Masaaki Shirakawa to continue the nation’s monetary stimulus program.  The Nikkei 225 advanced by 0.7 percent to 9,524.79 (NYSEARCA:EWJ).

Although the World Bank cut its forecast on China’s growth to 8.2 percent, a more significant economic decline will likely be avoided because the nation’s foreign exchange reserves rose to a record $3.31 trillion. Chinese yuan loans rose to $160.1 billion during March.  China’s Shanghai Composite Index advanced by 1.82% to 2,350 (NYSEARCA:FXI).  Hong Kong’s Hang Seng Index advanced by 0.93% to 20,327.

May futures for Brent Crude Oil increased by 28 cents to $120.46/bbl (NYSEARCA:USO).

June gold futures declined by $4.90 to $1,655 per ounce (NYSEARCA:GLD).

The euro rose against dollar by 0.35% trading at $1.3155 (NYSEARCA:FXE).

In the United States, stocks got off to a decent start, with the Dow Jones Industrials up 22 points (0.18%) to 12,827 at the opening bell.  The S&P 500 opened up 0.19% to 1,371 and the Nasdaq Composite started the day up 0.30% to 3025.  At 10:40 EDT, the Dow Jones Industrial Average was up 109 points (0.86%) to 12,915.  The S&P 500 advanced by 0.93% to 1,381.  The Nasdaq Composite rose by 1.05% to 3,048.

ETF Summary:

iShares Dow Jones US Industrial Sector Index Fund (NYSEARCA:IYJ) +1.15% as bullish trading activity in Europe, China and Japan outweighs the disappointing unemployment claims increase.

iShares FTSI/Xinhua China 25 Index Fund (NYSEARCA:FXI) +2.83%  following the 1.82% advance in the Shanghai Composite Index.   

Vanguard MSCI Europe ETF (NYSEARCA:VGK) +1.79% as a result of modest advances in European stock markets following Italy’s successful bond auction.

PowerShares DB US Dollar Index Bullish ETF (NYSEARCA:UUP) -0.50 as the euro continues to advance against the dollar.

SPDR S&P 500 INDEX ETF (NYSEARCA:SPY) +0.89% as investors struggle to maintain confidence following the disappointing unemployment claims increase.

Bottom line:  Bullish trading activity in China, Japan and Europe continues to outweigh the disappointing increase in American unemployment claims.

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Disclaimer: Wall Street Sector Selector trades a wide variety of ETFs and positions can change at any time.

About John Nyaradi (http://www.wallstreetsectorselector.com) John Nyaradi is Publisher of Wall Street Sector Selector: Your Home For ETF Investing! John writes a weekly guest column, John Nyaradi’s ETF Edge for MarketWatch.com and his investment articles have appeared in many online publications including Trading Markets, Money Show, Yahoo Finance, Investors Insight, Fidelity, ETF Daily News, iStock Analyst , among many others. His book, Super Sectors: How to Outsmart the Market Using Sector Rotation and ETFs, is published by John Wiley and Sons and included among the Years Top Investment Books in the 2011 Stock Trader’s Almanac.