What a difference a week makes. After drifting down for four consecutive weeks, global financial markets soared during the past week, largely making up the losses they incurred since the beginning of June. Oddly, the S&P 500 hit its exact June high of 956.23 (down to the second decimal place) in yesterday’s trading, before pulling back slightly.
Although you can expect some sort of pullback after such a quick run-up, better-than-expected earnings and improved forecasts in the United States have given investors more reason to believe the worst of the global downturn is over. Federal Chairman Ben Bernanke also said the United States was set to turn around this year, and he gave assurances that the Fed would keep interest rates low for the time being.
In today’s global financial markets, a rising tide — or sentiment — lifts all boats. As a result, many of the riskiest assets in your Global Stock Investor portfolio jumped the most. ICICI Bank Ltd. (IBN) soared 19.2%; Market Vectors Gold Miners ETF (GDX) jumped 10.6%; and the iShares MSCI Taiwan Index Fund (EWT) leapt 10.4%. And the newest addition to your portfolio, the Market Vectors Indonesia ETF (IDX), also ended the week up 3.4% — despite some rather unfortunate bombings in its capital, Jakarta.
Meanwhile, Freeport-McMoRan Copper & Gold Inc. (FCX), a stock that hit our stop on intra-day trading on the 8th of July, also soared back up to near record highs. The company announced Tuesday that its second-quarter profit dropped 38%. But that still beat analysts’ estimates as gold sales more than tripled. CEO Richard Adkerson expects to see improvement in the copper market because of demand from China and tighter inventories. With the stock back on an uptrend, I am moving it off of our watch list back to a BUY.
The Wisdom Tree Dreyfus Chinese Yuan Fund (CYB) stayed flat even as other global assets rallied. According to the Economist‘s most recent edition of the Big Mac Index published last week, the Chinese yuan is still 49% undervalued compared with the U.S. dollar on a purchasing power parity basis. CYB remains a defensive BUY.
iShares MSCI Taiwan Index Fund (EWT) soared past the $11 mark this week for the first time since early June. With the market up in overnight trading, EWT remains a long-term BUY.
ICICI Bank Ltd. (IBN) soared to $32.54, a high for 2009, as risk appetite returned to global stock markets. The volatile bet on India’s future is a long-term BUY.
Market Vectors Indonesia ETF (IDX) got off to a solid start, gaining 3.4%, despite the unrest in Jakarta. Your bet on the “new BRIC” remains a BUY.
Market Vectors Gold Miners ETF (GDX) jumped 10.6%. This leveraged play on the price of gold remains a long-term BUY.
Chemical & Mining Co. of Chile Inc. (SQM) remained flat as the price of potash and other fertilizers fell substantially in global markets. As a play on lithium, SQM remains a BUY.
UltraShort 20+ Year Treasury ProShares (TBT) jumped back to the $53 mark last week, before it settled back around the $51 level. With government debt exploding, this bet against U.S. Treasuries remains a BUY.