ETF Express: Week Ending 8 September 2023

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

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• Short US Equity funds (BBUS, SNAS) outperformed last week as a positive US jobs report revived fears that the Federal Reserve may not be done raising rates. US tech giants such as Apple and Nvidia fell more than 3% each on the report, and technology stocks in general fell as treasury yields jumped.¹
• Silver and platinum (ETPMAG, ETPMPT) were the poorest performers of the week as Chinese PMI fell to its lowest level since 2022.² Both metals have industrial demands that are mostly driven by Chinese markets: Silver’s industrial demand mostly lies with solar panel technology, while platinum demand is driven by the installation of catalytic converters in non-electric vehicles.
• There were $348 million in reported inflows for the week, and only $133.5 million in outflows, marking another week of net inflows for the Australian ETF industry.

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Tesla Bets On EV Infrastructure With Hilton Partnership

EV & Battery Technology

Hilton Hotels are partnering with Tesla to bring EV charging to its hotels across the US, Canada, and Mexico. The move, which involves installing 20,000 EV charging stations at 2,000 locations, would make Hilton’s EV charging network the largest of any hospitality provider.³

The installations are expected to be completed in 2025, while over 7,500 will become available to all EV users by the end of 2024.⁴ According to Bloomberg, a recent survey of 17,000 hotels in the American Hotel and Lodging Association found that only a quarter of participants offered charging facilities, while Hilton had EV charging at roughly 30% of its locations.⁵

The move comes as EV companies have faced increasing headwind in the form of China’s weakening economy. Tesla recently slashed prices on its Model S and X cars in both China and the US minutes after announcing its revamped Model 3.⁶ China’s EV price war demonstrates the highly competitive landscape Tesla may soon face in the US, and the company is now targeting infrastructure to gain an advantage on fellow manufacturers before they expand.

Despite uncertain economic conditions, EV demand across the world remains strong. The International Energy Agency expects EVs will account for 18% of all cars sold in 2023, up from 2.5% in 2019.⁷

Access the EV and battery technology transition with ACDC.

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Gold

Bullish

• Traders are predicting a 93% likelihood that the Federal Reserve will leave rates untouched in September.⁸ This comes after the most recent Fed commentary indicates that policymakers are not rushing to raise rates before more economic data becomes available.
• US dollar weakness has seen gold reclaim some of its luster as traders hedge against a possible peak in interest rates.⁹

Bearish

• There is still an approximate 50/50 chance of a November rate hike according to CME Fedwatch Tool, which may hamper gold’s performance.¹⁰

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Copper

Bullish

• With a small 0.1% gain in August, China's consumer prices returned to the green.¹¹ Additionally, factory-gate price deflation has subsided, indicating that the economy is beginning to stabilise and copper demand may return.¹²
• Beijing recently put in place a number of steps to support the real estate market, including lowering current mortgage rates for first-time homebuyers and modifying down payment requirements in some locations.¹³

Bearish

• Russia began tapping into its largest undeveloped copper deposit this week.¹⁴ The long awaited Udokan project will take place in Russia’s far East, relying on China as its main customer as US and EU sanctions continue to restrict trade.

Explore copper with WIRE.

Crude Oil

Bullish

• After falling for four consecutive weeks, US crude stockpiles have now reached their lowest level since December 2022, indicating a tightening of oil markets.¹⁵
• As Saudi Arabia and Russia have prolonged oil production cuts through the end of the year, the supply cushion for the next winter in the Northern Hemisphere is starting to look precarious.¹⁶ Oil scarcity would also result in higher gasoline prices globally, which might fuel inflation and put a strain on consumers, particularly in regions where fuel is highly relied upon for winter heating.

Bearish

• US energy firms have increased the number of operational oil rigs for the first time since June this week.¹⁷ Oil and gas rig count is an early predictor of future oil output, and oilfield services firm Patterson-UTI's CEO expects active US oil and gas rigs to increase by roughly 11% by the end of 2024.¹⁸

Explore oil with BCOM.

^{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 8th September 2023.}