We entered the third quarter some weeks ago with no abatement (rather surges) on the virus front and several U.S. states reversing the course of economic reopening. These states are the likes of California, Nevada, Arizona and Colorado.
Meanwhile, vaccine hopes have strengthened with U.S. biotech company Moderna MRNA planning to begin phase 3 tests with 30,000 volunteers on Jul 27. Some big companies like J.P. Morgan (JPM) and Goldman Sachs (GS) have come up with upbeat earnings results.
The European Union countries have agreed on a 750 billion euro stimulus package. At the meeting, the leaders agreed to distribute 390 billion euros, out of total 750 billion funds, in the form of grants. All of the above have led to a tug of war between bulls and bears so far this quarter.
Against this backdrop, below we highlight three sectors that have emerged winners and hold promise for the entire quarter.
Clean energy stocks and ETFs stood out again, maintaining their winning spree. Several clean energy ETFs have made it to the top-10 list so far. “Growing consumer electric vehicle adoption, state expansions of charging infrastructure, falling battery prices and increased solar-storage installations” have acted as a tailwind for the U.S. clean energy sector for the past few quarters.
Apart from the United States, Europe and China have been focusing on this area greatly. China has raised its renewable energy generation target for this year to 28.2% of the total, with 10.8% to come from non-hydropower sources.
If this was not enough, the coronavirus outbreak has been acting as a boon to the segment. Researchers recently reported that cleaner air caused by lockdowns has caused more sunlight to reach solar panels, which enhanced clean energy production.
Electric car maker Tesla’s (TSLA) solar venture is another positive for this space.Invesco Solar ETF (TAN) (up 26.1%), First Trust NASDAQ Clean Edge Green Energy Index ETF QCLN (up 21.3%), KraneShares MSCI China Environment Index ETF (KGRN) (up 24.3%) and Invesco WilderHill Clean Energy ETF (PBW) (up 19.5%) have been the key winners.
Silver has been on a stellar ride with prices climbing to the highest level in nearly four years. Increase in investment demand, pick-up in industrial activity due to factory reopening after the lockdowns, and investors’ appetite for alternatives to safe-haven asset gold (which is pretty pricey at the current level) led to the rally.
Unlike gold, silver has considerable presence in the industrial sector. About 50% of the metal’s total demand comes from industrial applications. So, the reopening of global economies is helping silver more than the yellow metal (read: Here’s Why Silver Outshining Gold ETFs).
Growth in the global solar PV industry, likely rebound in global computer shipments, as well as new sources of demand for sensors used in IoT and OLED lighting are providing a boost to silver demand. A raft of global stimulus, including the latest EU deal of borrowing 750 billion euros, should work wonders for this white metal in the near term too.
ETFMG Prime Junior Silver Miners ETF (SILJ) (up 23.3%) and Silver Miners ETF (SIL) (up 20.4%) have been among the key gainers in this field.
‘‘Disruptive innovation’’ in technology has probably been the most sought-after this year as coronavirus-led social distancing and contactless activities enhanced the need for technological advancement. The touch of technology is highly demanding now in the field of Genomic Revolution, industrial innovation in energy, automation and manufacturing, shared technology, infrastructure and services and last but not the least Fintech, if we go by ARK Funds.
No wonder, the tech-heavy Nasdaq has been hitting all-time highs at regular intervals even amid the pandemic. With virus cases rising continuously lately, ETFs related to the disruptive technologies managed to make a strong position for themselves. ARK Innovation ETF ARKK (up 15.7%) and ARK Next Generation Internet ETF ARKW (up 15.6%) thus have stolen the show so far this quarter in the tech space.
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