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Have Equity Markets Captured Oil’s Gains?

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Equity market

The S&P 400 Mid-Cap Index (IVOO) rose 0.3% on October 20–27, 2017. We already discussed the S&P 500 Index (SPY) and the Dow Jones Industrial Average Index’s (DIA) price performance in the previous part of this series. During this period, US crude oil (USO) December futures rose 4%.

Last week, the FTSE 100 Index (EWU) fell 0.2%, while the CAC 40 Index (EWQ) rose 2.3%. Brent crude oil active futures rose 4.7% during this period. Oil’s movements could impact these equity indexes.

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SPDR ETFs

Last week, the Energy Select Sector SPDR ETF (XLE) fell 0.6%. It was the smallest loser on our list of sector-based SPDR ETFs. During this period, the Technology Select Sector SPDR ETF (XLK) rose 2.4%, while the Health Care Select Sector SPDR ETF (XLV) fell 2.1%—the largest among our list of sector-based SPDR ETFs.

Energy sub-sector ETFs

Apart from XLE, the price performance of other energy sub-sector ETFs in the week ended October 27, 2017, are:

  • the Alerian MLP ETF (AMLP) at -1.4%
  • the VanEck Vectors Oil Services ETF (OIH) at -0.6%
  • the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) at 0.2%

We already highlighted XLE’s performance during this period. So, while equity indexes broadly gained, energy sub-sector ETFs ignored the gain in oil prices last week. The gains in the broad equity markets likely weren’t related to the gains in oil prices.

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