Heightened geopolitical tensions and cybersecurity concerns may be propelling exchange-traded funds that invest in stocks linked to those areas toward potential “breakouts,” according to Renaissance Macro Research.
Shares of the First Trust Nasdaq Cybersecurity ETF
have jumped 9.5% this year through Thursday, while the iShares U.S. Aerospace & Defense ETF
climbed 4.5% over the same period, according to FactSet data.
“We live in dangerous times and that is being reflected in the stock market,” as the iShares U.S. Aerospace & Defense ETF and First Trust Nasdaq Cybersecurity ETF are “on the verge of breakouts,” Renaissance Macro Research said in a note Friday.
The First Trust Nasdaq Cybersecurity ETF could break out from “a bearish trend,” while the iShares U.S. Aerospace & Defense ETF is “looking to make new all-time highs,” Renaissance Macro said in the note. “We would add to longs in both on breakouts” with “relative confirmation.”
Meanwhile, investors have been monitoring the Russia-Ukraine war as well as tensions between China and the U.S. China has said it’s “ready to fight” after completing combat exercises around Taiwan in response to the Taiwanese president’s recent trip to the U.S., according to an April 10 Associated Press report.
Also this week, Massachusetts Air National Guard member Jack Teixeira, a 21-year-old IT specialist, was arrested Thursday in connection with the leaking of “highly classified military documents about the Ukraine war and other top national security issues.”
Remarking on the leaked Defense Department documents, which were posted on social-media sites, President Joe Biden said Thursday that “there’s nothing contemporaneous that I’m aware of that is of great consequence.”
The top three holdings of BlackRock’s iShares U.S. Aerospace & Defense ETF on April 13 were Raytheon Technologies Corp.
and Lockheed Martin Crop.
according to details of the fund on the asset manager’s website.
The First Trust Nasdaq Cybersecurity ETF’s largest holdings on April 13 included Fortinet Inc.
Cisco Systems Inc.
and Palo Alto Networks Inc.
according to First Trust’s website.
The First Trust Nasdaq Cybersecurity ETF was trading 0.8% lower Friday afternoon, while the iShares U.S. Aerospace & Defense ETF fell 1.9%, according to FactSet data, at last check.
The U.S. stock market was broadly down in Friday afternoon trading, as investors digested big bank earnings, data showing a drop in retail sales in March and Federal Reserve Gov. Christopher Waller’s remarks that the Fed needs to keep raising interest rates because inflation is “still much too high.”
The Dow Jones Industrial Average
was down 0.5% in Friday afternoon trading, while the S&P 500
shed 0.3% and the technology-heavy Nasdaq Composite
fell 0.5%, according to FactSet data, at last check.