ETF Express: Week Ending 26 January 2024

ETF Express is Global X’s weekly coverage of the latest ETF Market Moves, Thematic Spotlight and Commodity Calls.

 

  • Crude Oil (OOO) was the top performer last week after a US affiliated oil tanker was struck in a missile attack by Houthi rebels off the coast of Yemen.1 Traders were forced to reprice disruption risks as oil shipments in the region had not been impacted prior to this attack.
  • Ethereum (EETH) was the poorest performing asset of the week as traders mulled the possibility of an acceleration in outflows from the Grayscale Bitcoin Trust (GBTC). GBTC has seen over US$1.5 billion in outflows since the completion of its ETF transition.2 Much of the selling can be attributed to either profit taking or fund switching due to GBTC’s high management fee. Nonetheless, the continuous outflows have contributed to significant price pressure on the crypto industry, and investors fear an acceleration could facilitate an asset-wide selloff.
  • There were $537 million in reported inflows for the shortened week and $78.9 million in outflows, marking a strong week of net inflows for the Australian ETF industry.

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Netflix Streams into FANG Earnings Season with a Bang

Big Tech & Streaming

Netflix had one of its most successful quarters ever in Q4 2023. The streaming giant’s earnings revealed it added more than 13 million subscribers in the three month stretch –  crushing analyst predictions of 8.7 million and marking its biggest surge in subscriptions since covid lockdowns in Q1 2020.3 On the financial side, the company cashed in US$8.8 billion in revenue, its strongest sales period on record, and comfortably met market expectations.4

Netflix’s Q4 earnings capped off an impressive year of recovery for the streaming company. In 2022, Netflix suffered a brutal 75% sell-off after reporting a loss in userbase for the first time in its history.5 This year, Netflix’s total revenue and profit rose to US$33.7 billion and US$5.4 billion respectively – both by-far the best results in company history – while its total userbase crossed 260 million, almost ten times the total population of Australia.6

The majority of Netflix competitors have not reported for the quarter, however, market pricing indicates that their outlook may pale in comparison. While Netflix has rallied more than 63% over the past 12 months, industry competitors such as Disney, Warner Bros Discovery, and Paramount have fallen by 9%, 27% and 39% respectively.7 Industry insiders aside, Netflix’s report marks a stellar start for big tech earnings due in the coming weeks. This week, particularly, will be one to watch, with earnings from some of the biggest names including Apple, Amazon, Meta, Microsoft, Google, and more.8

Explore US tech giants with FANG.

 

Uranium

Bullish

  • Ukraine expects to start construction on four new nuclear reactors in 2024.9 The newly announced expansion plan is much more aggressive than previously outlined by the Ukrainian government, which spoke of beginning development sometime in 2024, but not for all four plants to start construction simultaneously.
  • The completion of the proposed plants will more than double the number of nuclear power reactors in Ukraine.10 Currently, three nuclear reactors operate in the country, providing roughly 55% of the nation’s electricity.

Bearish

  • Paladin Energy’s plan to restart its Langer Heinrich uranium mine is now 93% complete.11 The mine processed its first ore in six years on the 20th of January and will be ramping up for commercial production by the end of Q1 2024. Langer Heinrich is one of the world’s largest uranium mines. At full capacity, it contributes to roughly 4% of global uranium supply.

Explore uranium with ATOM.

Crude Oil

Bullish

  • Crude oil has hit a two-month high following Houthi rebel’s continued attacks on ships in the Red Sea.12 Middle Eastern geopolitical conflict remains the main driver of oil prices.
  • An oil tanker was struck by a Houthi missile off the coast of Yemen, forcing traders to price-in further risks of disruption.13 Prior to this attack, oil shipments had been minimally impacted.
  • China announced a 0.5% reduction in Reserve Requirement Ratio (RRR) for Chinese banks.14 The measure seeks to incentivise bank lending and is expected to be followed by further economic policy changes to buoy market sentiments. A return to growth for China’s economy will be key to crude oil demand in 2024.

Bearish

  • A report by the IEA has indicated that crude oil supply will have a robust year of growth in 2024.15 The US, Brazil, and Canada are forecasted to be the largest contributors to this growth, outside of the OPEC.

Explore crude oil with BCOM.

Gold

Bullish

  • Safe-haven investing has buoyed gold prices as geopolitical conflicts in the Middle East remain at risk of escalation.16
  • The approaching Lunar New Year could see a period of increased retail demand for physical gold in Asian countries.

Bearish

  • Positive economic data in the US has reduced Fed rate-cut odds for March. US GDP came in at 3.3% last week, much higher than the forecasted 2.0%.17 Annualised core inflation fell to 2.9% YoY beating estimates of 3.0%,18 and both services and manufacturing PMIs reported above 50, well into expansion territory.19

Explore physical gold with GOLD.

 

Forecasts are not guaranteed, and undue reliance should not be placed on them. This information is based on views held by Global X or referenced sources as of 30th January 2024.