The Long and Short of it, week ending 03 Nov 2023 IT
Inserito:
Major stock indexes notched impressive gains last week with the Nasdaq Composite index rising nearly 7%, the S&P 500 gaining almost 6% and the Dow Jones Industrial average climbing 5%. The gains came partially on the back of better-than-expected corporate earnings but mostly from increased expectations the Fed was done hiking rates. The FOMC left rates unchanged, as expected, but subsequent comments from Fed Chair Powell suggesting higher long-term rates may alleviate the need for further rate increases lifted expectations of a Fed monetary policy pivot and set the stage for lower rates and significantly increased risk-on sentiment. Wednesday’s refunding announcement, with issuance more heavily weighted to short-term bills and notes than expected, helped move longer-term rates lower and, as a result, stock prices higher. Friday’s weaker-than-expected jobs report seemingly affirmed Fed-pivot expectations, again pushing rates lower and lifting – in its wake – stock prices. For the week, the S&P 500 Index rose 5.8% to 4,358.34, the Nasdaq Composite Index gained 5.5% to 13,478.28 the Dow Jones Industrial Average increased 5.1% to 34,061.32, the 10-year U.S. Treasury rate fell 26bps to 4.58% and the U.S. dollar (as measured by the ICE U.S. Dollar index – DXY) weakened 1.4%.
European stock indexes moved higher as well last week but underperformed their U.S. counterparts. As in the U.S. gains were mainly powered by growing expectations that central bank monetary policy would pivot beginning with no further rate increases. This sentiment was buoyed by declining German inflation, contracting euro zone GDP and weaker UK employment, pushing rates lower and, as a result, increasing risk-on sentiment. The STOXX 600 Index outperformed the FTSE 100 Index, benefiting from greater tech exposure and smaller exposure to commodities and U.S. dollar revenues. For the week, the FTSE 100 Index increased 1.7% to 7,417.73, the STOXX 600 Index rose 3.4% to 444.24, the 10-year Gilt rate fell 26bps to 4.29%, the 10-year Bund rate decreased 19bps to 2.64% and the British pound and the euro strengthened 2.1% and 1.6%, respectively, both versus the U.S. dollar.
Top performing ETPs over the week
| . | 3x Long ETPs | 3x Short ETPs | ||
|---|---|---|---|---|
| UK | +3x Rio Tinto (3LRI) | +16.4% | -3x Barclays (3SBC) | +37.4% |
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The Long and Short of it, week ending 03 Nov 2023
