ETF Outlook for Friday, April 25, 2014:
iShares MSCI Japan ETF (NYSE:EWJ)
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Japanese core inflation for March came in at 1.3 percent, the same as the prior month, but below estimates of 1.4 percent. The data was viewed as positive because it could open the door to more bond purchases from the Bank of Japan.
The inflation target for the central bank is two percent and holding steady at 1.3 percent is far enough below the goal to force the hand of the central bank. The news was enough to help the Japanese stock market close with a slight gain of 0.2 percent as much of the rest of the world was trading lower.
KraneShares China Internet ETF (NYSE:KWEB)
Chinese Internet giant Alibaba is considering raising its IPO to $20 billion, which would make it the largest U.S. IPO in history, above the $19.7 billion that Visa (NYSE:V) raised in 2010.
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The news could be good for the companys peers that are represented in KWEB. The ETF has struggled the last six weeks as money as moved out of the high-flying tech stocks. Weakness overnight in China will likely lead to early selling in KWEB, however longer-term the Alibaba news could be a positive.
First Trust Dow Jones Internet ETF (NYSE:FDN)
Amazon.com (NASDAQ:AMZN) shares are falling this morning after reporting mixed quarterly earnings last night. Net income grew from $82 million to $108 million, however the cost of earnings the money remains high.
Sales of $19.74 billion grew by 23 percent and adjusted EPS came in at $0.23, a penny below estimates. With AMZN making up 7.5 percent of FDN and the top holding in the ETF, the shares are also lower in early trading and will be fighting an uphill battle all day.
SPDR Financial Sector ETF (NYSE:XLF)
More fines could be possible for Bank of America (NYSE:BAC) after it was leaked last night that a $13 billion settlement may be in the works regarding mortgages during the financial crisis.
The news has the stock down one percent in pre-market trading and weighing on the entire sector as the government has another eight lenders under investigation. The entire situation is nearly laughable as the government was just as involved in the financial crisis as the banks, yet they choose the fines on the banks. Look for XLF to open lower and struggle today.
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