Ron Day
2 min read
Broad equity ETFs like the Vanguard S&P 500 ETF (VOO) rose amid signs that missile fire between Israel and Iran, which hammered markets last week, won’t expand into a wider regional conflict as feared. Oil funds dropped after last week’s jump.
VOO and the SPDR Dow Jones Industrial Average ETF Trust (DIA) added 1.1% around noon. Both dropped Friday following Israel’s bombardment aimed at crippling Iran’s nuclear-enrichment capabilities.
Crude oil prices fell after a previous surge as fighting entered a fourth day, and the United States Oil Fund LP (USO) declined 3.5%.
USO Net Fund Flows—Source: FactSet
Fears of the war spreading beyond Iran and Israel appeared to modulate, as the Wall Street Journal reported Iran has reached out to Arab officials and told them it wishes to end the fighting and resume nuclear disarmament talks. Israel, which began bombing Iran after the Persian nation vowed to continue enriching uranium following its censure by the International Atomic Energy Agency, has said the attacks may continue for many more days.
Defense ETFs advanced, with the iShares U.S. Aerospace & Defense ETF (ITA) adding 0.3% and the Select STOXX Europe Aerospace & Defense ETF (EUAD) jumping 1%. Tech ETFs rebounded, with the Invesco QQQ Trust (QQQ) rising 1.4% and the VanEck Semiconductor ETF (SMH) adding 2.8%.
Shipping rates rose further, Reuters reported, on concerns the violence will force tankers out of the critical Strait of Hormuz shipping lane and into longer routes. The Breakwave Tanker Shipping ETF (BWET), which tracks futures contracts in the crude-oil-shipping market, soared for a second day, adding nearly 17% at Monday's high before cooling off.
Israel ETFs reversed Friday’s declines. The iShares MSCI Israel ETF (EIS) jumped 5.9%, and the ARK Israel Innovative Technology ETF (IZRL) rose 3.9%. Investors pulled a net $4.2 million from EIS Friday.
Both the iShares 20+ Year Treasury Bond ETF (TLT) and the iShares 7-10 Year Treasury Bond ETF (IEF) dipped slightly.
