How the Weaker Dollar Boosted the Material Sector in April
The Materials Select Sector SPDR ETF (XLB), which tracks the performance of the material sector, showed an improved performance in April 2017. It rose nearly 1.6% during the month. Dow Chemical (DOW), Monsanto (MON), Praxair (PX), and Ecolab (ECL) returned -0.4%, 2.3%, 5.9%, and 2.5%, respectively, in April 2017.
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The stronger dollar (UUP) hampers the performance of the material sector, as it hurts exports. On the other hand, the weaker dollar is a good sign for exports. The dollar index fell nearly 1.5% in April 2017, which helped the material sector.
The dollar has shown some weakness in the past two months. The Trump administration’s delay in implementing policy reformation is weighing on the dollar index. Some economic indicators are also falling, which is worrying some investors.
Material sector as compared to broader market
The broader market S&P 500 Index rose nearly 1.4% in April 2017, and the material sector rose 1.6% in the same month. The Dow Jones Industrial Average (DIA) and the Nasdaq Composite (COMP-INDEX) returned nearly 1.3% and 2.2%, respectively, in April 2017.
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