Global Investment Presents Opportunity

Market Moves

With U.S. markets stuck in narrow trading ranges, investors have shown signs that they are willing to look around for opportunity. Investors frequently neglect opportunities in markets outside their own country or region. However, right now might be a good time for U.S.-based investors to look around at which markets are showing a bullish trend within their own countries.

While the S&P 500 (SPX), the Nasdaq 100 (NDX), and the Dow Jones Industrial Average (DJX) all ended their third day in a row nearly unchanged, investors might consider looking at Taiwan-based companies. The chart below shows a year-to-date comparison of exchange traded funds from iShares that track MSCI indexes for stocks in various countries, and compares them to the iShares emerging markets ETF (EEM) for comparison. Although the South Korea ETF (EWY) has shown lackluster performance on a fallout from trade talks between the U.S. and China, other countries in the region, such as Japan (EWJ), Australia (EWA), and Taiwan (EWT) have outpaced the S&P 500 so far this year. 

Chart showing the performance of various international ETFs

Health Care Stocks Are Becoming More Attractive

Health care stocks have lagged behind all other market sectors for 2019 except the energy sector. However, over the past month, these stocks have begun to rise faster than average to bring the sector into a position more competitive with other sectors in the market.

The chart below shows how State Street's health care sector-tracking ETF (XLV) moved from its short-term position in October as the sector with the lowest returns to being nearly on par with State Street's S&P 500-tracking ETF (SPY). Surprisingly, this is happening without the leadership of the most heavily represented stocks in the sector.

Image showing the performance of the health care sector vs. other sectors

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Why Goldman Says Go 'Overweight' U.S. With Stocks at Record Levels

Medtronic Outpacing Other Health Care Stocks

The price chart for Medtronic plc (MDT) shows that it has moved higher than the average stock in the health care sector. In fact, four out of the five largest holdings in the health care sector ETV (XLV) are showing lower returns than XLV on a year-to-date basis. Only Medtronic, the fifth largest holding in the ETF, is outpacing the average. If this sector surges higher in the near future, it seems a good bet that Medtronic stock will lead the way.  

Chart showing the share price performance of Medtronic plc (MDT)

The Bottom Line

Stocks closed nearly unchanged for the third day in a row. Global investment opportunities appear to be available in Taiwan, Japan, Australia, and Germany. The health care sector has had a slow start for the year but may have a nice finish since investors are optimistic and the stocks in that sector are comparatively undervalued. Among these stocks, Medtronic is positioned to be a leader.

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