Wall Street was upbeat last week with the S&P 500, the Dow Jones, the Nasdaq and the Russell 2000 adding 2.2%, 1.9%, 2.4% and 5.4%, respectively. The reason behind the market rally was cooling inflation. Softening in the inflation data triggered the possibility of a less-hawkish Fed, going forward.
Following the release of this data, market indicators showed a nearly 95% probability that the Federal Reserve would keep interest rates unchanged in December, as reflected in data from the CME Group. Notably, the Consumer Price Index (CPI) showed prices rose 0% over last month and 3.2% over the prior year in October, a deceleration from September’s 0.4% monthly increase and 3.7% annual gain in prices (read: Slowest Inflation Since Sep’21 to Boost Growth ETFs in Near Term).
Economists’ expectations fell short of the actual data, as they had predicted a 0.1% month-over-month increase and a 3.3% year-over-year increase in prices. Core prices were also anticipated to rise by 0.3% over the prior month and 4.1% over the previous year. Core inflation marked its slowest pace in over two years.
The technology sector had regained its momentum. The renewed confidence is driven by hopes that the Fed’s aggressive interest rate hiking campaign might be nearing an end. Additionally, hedge funds’ upsurge in big tech investments added to the strength. Tech ETFs hit 52-week highs.
Bitcoin surged to near $38,000 — a level last seen in May 2022 — powered by an ongoing rally spurred by ETF demand expectations. The ongoing rally spurred by expectations of regulatory approval for Bitcoin ETFs in the United States has pushed the world’s largest cryptocurrency to this height (read: Bitcoin Rallies Close to $38,000: 5 ETF Winners).
Against this backdrop, below we highlight a few top-performing ETFs.
ETFs in Focus
KraneShares Global Carbon Offset Strategy ETF (KSET) – Up 16.6%
The KraneShares Global Carbon Offset Strategy ETF provides broad coverage of the voluntary carbon market by tracking carbon offset futures contracts. The fund charges 79 bps in fees.
ARK Genomic Revolution ETF (ARKG) – Up 14.4%
ARK Genomic Revolution ETF is an actively managed fund focused on companies that are likely to benefit from extending and enhancing the quality of human and other life by incorporating technological and scientific developments, and advancements in genomics into their business.
Breakwave Dry Bulk Shipping ETF (BDRY) – Up 12.6%
The underlying Capesize 5TC Index, Panamax 4TC Index & Supramax 6TC Index measure rates for shipping dry bulk freight. Global trade is showing promising signs of recovery, as evident from the insights of Vincent Clerc, the CEO of shipping giant Maersk. This has probably boosted the shipping ETF (read: Why to Bet on Shipping ETFs Now).
Global X Hydrogen ETF (HYDR) – Up 11.5%
The underlying Solactive Global Hydrogen Index provides exposure to companies that are positioned to benefit from further advances in the field of hydrogen technology. According to McKinsey, total hydrogen demand could reach 660 million tons by 2050, easing more than 20% of emissions worldwide, as quoted on investorplace.com. A considerable 7.1% compounding annual growth rate is predicted for the hydrogen industry by 2040.
Sprott Junior Uranium Miners ETF (URNJ) – Up 11.2%
Uranium prices have jumped to their highest level in 12 years. The demand for uranium has been rising thanks to renewed interest in alternative sources of energy, while supply has become constrained. Uranium, primarily utilized in nuclear power plants, is one of the most environmentally friendly methods for generating electricity. Hedge funds are pouring money into uranium stocks as they wager on a nuclear-powered future.
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