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5 Best Inverse/Leveraged ETF Areas of Last Week

Wall Street was subdued last week due to the Fed's taper talks. As a result, these inverse ETFs won massively.

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This story originally appeared on Zacks

Wall Street was subdued last week due to the Fed’s taper talks. The spread of the highly contagious COVID-19 Delta variant and China's persistent crackdown on its tech sector also weighed on the global markets. The S&P 500, the Dow Jones and the Nasdaq lost 0.6%, 1.11% and 0.7% last week.

- Zacks

Investors’ sentiment, however, restored to close out the week after Dallas Federal Reserve President Robert Kaplan said he could adjust his views on the Fed’s QE tapering if the Delta variant wreaks havoc on the economy, as quoted on the Street.com article. As a result, indexes gained handsomely on the final day of the week and lowered the weekly losses.

Notably, Kaplan said earlier this month that he wanted a QE tapering announcement as early as in September. Against this backdrop, below we highlight a few inverse/leveraged ETFs of the last week. Mostly, bear ETFs offered a sturdy performance in week under review.

ETFs in Focus

Inverse Energy 

Microsectors -3X U.S. Big Oil Index ETN NRGD andS&P Oil & Gas Expl Bear 3X Direxion (DRIP) gained about 27.1% and 19.2%, respectively. Rising coronavirus infection rates weighed on the energy demand outlook. Plus, the Fed’s QE taper talks boosted the likelihood of strength in the greenback, which could be a potential headwind for all commodities including oil.

Inverse Gold & Silver

Microsectors Gold Miners -3X ETN GDXD, Etfmg Prime 2X Daily Inverse Junior Silver Miner (SINV) andJunior Gold Mine Bear 3X Direxion (JDST) gained about 21.1%, 20.3% and 16.2%, respectively, last week. The segment suffered as the likely dollar strength will act against gold and silver investing.

Inverse China

FTSE China Bear 3X Direxion YANG and Ultrashort FTSE China 50 ETF (FXP) gained about 20.9% and 13.7%, respectively, in the week that went by. Chinese stocks were hit by the crackdown on various sectors including the all-important technology companies. Regulators in the country recently increased their scrutiny of Internet-technology companies.

Several state-media commentaries and articles also indicated that Chinese regulators intend to be harsher on more industries, triggering selloffs in shares of online pharmacy operators and companies that make expensive liquor, as quoted on Wall Street Journal.

Inverse High-Beta

As rising rate worries hurt markets last week, high-beta stocks had every reason to underperform. Hence, inverse leveraged S&P 500 High Beta Bear 3X Direxion HIBS added about 14.9% last week.

Inverse Emerging Markets         

Emerging Markets Bear 3X Direxion EDZ gained about 13.8% last week. Emerging markets also tend to underperform in a rising dollar environment, making it tougher for countries that have borrowings in the dollar to service their debt. Plus, investors won’t find the high-yielding emerging markets’ ETFs and stocks lucrative as domestic securities start yielding better.

COVID issues also continue to pose threats to the emerging markets. Moreover, the upsurge in the dollar is bad for raw materials and commodities as these are priced in U.S. dollar. And most of the emerging markets are commodity-rich (read: U.S. Dollar to Strengthen? ETFs to Gain/Lose).



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Direxion Daily MSCI Emerging Markets Bear 3x Shares (EDZ): ETF Research Reports

 

Direxion Daily FTSE China Bear 3X Shares (YANG): ETF Research Reports

 

MicroSectors U.S. Big Oil Index 3X Inverse Leveraged ETN (NRGD): ETF Research Reports

 

Direxion Daily S&P 500 High Beta Bear 3X Shares (HIBS): ETF Research Reports

 

MicroSectors Gold Miners 3X Inverse Leveraged ETNs (GDXD): ETF Research Reports

 

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Zacks Investment Research