VIX Sinks to Its Lowest Level Since January

Wall Street's 'fear gauge' fell to 12.55, its lowest level since January, almost 40% below its long run average, after topping the 19-mark last month. While the VIX may not mirror every potential risk that could depress stock values, from postponed Federal Reserve interest rate cuts to geopolitical uncertainties and the forthcoming U.S. Presidential election in November, it simply indicates the tranquility that has prevailed over the last three weeks. Moreover, expectations for rate cuts later this year have been reinforced by a cooling U.S. labor market.

Last week witnessed the highest number of new unemployment claims filed by Americans in over eight months, providing further indication of a gradual slowing down of the labor market. The Labor Department's weekly jobless claims report, the most current reflection of the economy's state, arrived after last week's news showing the economy added the smallest number of jobs in six months in April, accompanied by a slump in job openings to a three-year low in March.

The S&P 500 jumped 1.85% for the week while the tech-heavy Nasdaq Composite gained 1.14%. In Europe, a few stock indices like the MSCI EMU, up 3.08% at 169.10, reached record highs, boosted by company earnings.

Several Asian indices rose to their highest in over a year, fueled by renewed speculation that a rate cut from the Federal Reserve is on the horizon. The Shanghai Composite gained 1.60%, Korea’s Kospi added 1.91% while the Taiwan weighted index advanced 1.86%. By contrast, India’s Nifty fell 1.87% and Japan’s Nikkei remained virtually unchanged, down 0.02%. The yen saw a slump following a significant surge last week.

Sector of the Week: Utilities   

The Utilities sector, which began as one of the S&P 500's laggards in the first quarter, has remarkably turned the tables to become this quarter's top-performing sector, boasting a 8.36% quarter-to-date gain. This transformation is remarkable considering the sector's standing as the poorest performer in 2023, with an annual loss of 10.20%.

Here are a few examples of ETFs exposed to the utilities sector in Europe and in the U.S.

European Utillities ETFs

North American Utilities ETFs

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.