ETF Express: Week Ending 6 October 2023

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

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Risk-on, tech-oriented ETFs (EBTC, FANG, LNAS, HYGG, LPGD, N100, NDQ) rallied across the board last week after US’s positive jobs report pushed back fears of a possible recession. The American economy added 336,000 jobs in September, almost double what economist had predicted the month prior.¹
Energy transition ETFs (CLNE, ETPMPD, HGEN, TANN, XMET) were poorest performers, weighed down by the possibility of interest rates staying higher for longer. Renewable energy pipelines usually require long project timelines and are dependent on material costs, high rates inflict significant pressure on these debt-reliant companies.²

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Clorox Hack Highlights Cybersecurity Urgency

Cybersecurity and Technology

Clorox’s preliminary Q1 2024 financial information, revealed the ramifications of their August cyberattack may see net sales decrease as much as 28% – translating to roughly US$593 million.³ On August 14, Clorox disclosed in a SEC filing that certain systems within its organisation had been taken offline after unauthorised activity.⁴ Since then, it was disclosed that the cyberattack had rendered multiple US factories unable to operate, tightening the company’s supplies across its product range.

While Clorox reports the majority of its US factories have now resumed activity, the company projects the attack will likely continue to affect sales and profits as supply struggles to normalise. Clorox shares fell 5% on its Q1 report, adding to a total drop of more than 20% since its initial statement on the hack.⁵ Analysts also note the company may be at risk of losing market share as supermarkets and outlets look to other brands to meet product shortages.⁶

The incident – suspected to also be linked to the hackings at MGM Casino and Caesars Entertainment in recent weeks⁷ – highlights the rising importance of cybersecurity to international enterprises. Globally, cybercrime saw businesses lose US$7.1 trillion in 2022, and that cost is projected to rise to US$8.15 trillion in 2023.⁸

Invest in cybersecurity with BUGG.

Crude Oil

Bullish

Hamas’ strikes against Israel saw oil prices surge as war-risk premiums returned to markets.⁹ While Israel and Palestine are not major oil producers, they are a part of a key oil producing region and traders are pricing in an increased risk of disruption.

Bearish

Analysts are concerned that peak fuel demand may be behind us. Prolonged elevated pricing caused by the OPEC’s supply restriction, among other factors, may induce a demand crunch whereby consumers pull back due to prohibitive pricing.¹⁰

Explore crude oil with BCOM.

Gold

Bullish

Gold rose alongside the US dollar as investors sought safe haven from the surprise Hamas’ attack on Israel.¹¹ The destabilisation of Israel, Palestine, and neighbouring countries could see local currencies plummet.

Bearish

A strong jobs report in the US indicates the Fed may have economic wiggle room to further increase rates or keep rates higher for longer.¹²

Explore physical gold with GOLD.

Lithium

Bullish

The US Department of Energy is in talks with Lithium Americas Corp to lend US$1 billion to support development of the Thacker Pass lithium mine in Nevada.¹³ The outlay, which would be enough to fund about half the costs of the entire project, would be the largest loan awarded to a mining company through the Energy Department’s Loan Programs Office.¹⁴
Automaker Stellantis invested US$90 million for a 20% stake in Argentina Lithium, an early-stage exploration company. The move highlights the trend of electric automakers taking steps to vertically integrate and secure lithium supplies.¹⁵

Bearish

Argentina is pushing to levy a new tax on lithium producers and potentially hold back production for national battery projects. The country is proposing for up to 20% of local lithium output to be kept solely for domestic battery projects.

Explore lithium with ACDC and GMTL.

^{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 at 6th October 2023.}