Belgian ETF Flat, Safe Havens Rise

March 22, 2016

Market reaction to today’s terrorist attacks in Brussels that killed 34 people and injured more than 100 has been somewhat muted despite the carnage and halting of cross-border traffic.

In addition security alerts were being issued in the wake of the attacks at the Brussels airport and a rush-hour subway, according to Reuters, and the city of Brussels was in a lockdown.

The iShares MSCI Belgium Capped (EWK | B-77), a market-cap-weighted ETF of Belgian securities with $123 million in assets, was down 0.34%. The fund has held its own even with chaotic scene developing in Belgium’s and the eurozone’s financial capital. The iShares MSCI Eurozone (EZU | A-85) was down nearly twice that of EWK, at 0.76%. Year-to-date, both are trailing the SPDR S&P 500 (SPY | A-97). SPY is up 0.86%, while EWK is down 3.54% and EZU is down 1.97%.

Safe-Haven Rise

However, safe-haven ETFs targeting U.S. Treasurys and gold were getting buyers’ attention, as they both rose on the terror news. The iShares 20+ Year Treasury Bond (TLT | A-83) rose 0.67%, while the iShares 7-10 Year Treasury Bond (IEF | A-55) rose 0.20% as investors bought U.S. bonds in today’s risk-off market. The SPDR Gold (GLD | A-100) gained 0.76%.

Safe-haven ETFs such as these have been popular with investors all year, as they outperform stocks, which have struggled to hold any gains this year. The physically backed gold ETF, GLD, has seen a surprising reversal of fortune—up 18% for the year—after the last few years of underperformance.

Charts courtesy of StockCharts.com

The airport in Brussels has been closed, with all flights either canceled or diverted, and all long-distance rail service—including the cross-channel tunnel from Brussels to London—has been shut down, Reuters reports. The government there gave no timetable for the resumption of services, and urged citizens to stay where they were.

"We've got a market that's focused on the human side versus the economic side, which is the right thing to do," said Art Hogan, chief market strategist at Wunderlich Securities, also noting a flight to safety with the U.S. dollar index and gold higher, and Treasury yields and stock index futures lower.

WTI crude oil, which can spike after geopolitical events and terrorist attacks, was down nearly 1%, but was holding on to its $40 handle at $41.15.

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