The Materials Select Sector SPDR ETF (XLB) performed positively in June 2017, rising nearly 1.8%. Major material stocks such as The Dow Chemical Company (DOW), Monsanto (MON), Praxair (PX), and Ecolab (ECL) returned 2.5%, 0.8%, 0.7%, and 0.2%, respectively, in June 2017.
A stronger dollar (UUP) (USDU) hampers the performance of the materials sector, while a weaker dollar helps the materials sector. A weaker US dollar is a boon for dollar-denominated assets such as commodities, making them cheaper for buyers of other currencies. The weaker dollar boosted the materials sector.
Weakness in dollar index
The dollar index fell nearly 1.2% in June 2017. The weakness in the dollar index came after both the European Central Bank and the Bank of England signaled for a hawkish stance in the near future. Afterward, the euro and the British pound (FXB) showed some upward movement, while the US dollar showed some selling pressure. The Japanese yen (FXY) also appreciated in the last two weeks of June 2017 as the demand for safe-haven currencies rose.
The dollar index fell nearly 6.9% during the first half of 2017, and in the second quarter of 2017, it fell nearly 4.7%. The dollar index has been trending downwards in the last six months, mainly due to rising uncertainty about President Donald Trump’s agenda. You may be interested in reading Why BlackRock Is So Optimistic about US Stocks.