The Long and Short of it, week ending 22 Sep 2023 IT
Inserito:
A down week for U.S. stock markets, pressured by higher rates and a resilient economy. Markets were subdued prior to Wednesday’s FOMC announcement, moving slightly lower on uncertainty surrounding the Fed’s projections and monetary “tone”. Wednesday’s as-expected announcement of no change to the Fed funds target rate was accompanied, however, by hawkish overtones including prospects for another rate hike before year-end and the signalling that rates could very well remain higher for longer than previously expected, adding to downward price pressures. Thursday’s lower-than-expected initial jobless claims seemed to topple the giant, pushing the 3 major stock indexes down over 1% and sending the 10-year Treasury rate to 16-year highs. Markets ended the week on downbeat with risk-off sentiment setting the tone. For the week, the S&P 500 Index fell 2.9% to 4,320.06, the Nasdaq Composite Index dropped 3.6% to 13,211.81, the Dow Jones Industrial Average decreased 1.9% to 33,964.44, the 10-year U.S. Treasury rate rose 11bps to 4.44% and the U.S. dollar (as measured by the ICE U.S. Dollar index – DXY) strengthened 0.2%.
European stock markets also moved lower but not nearly as sharply as U.S. markets. Markets were somewhat volatile falling sharply Monday possibly due to Soc Gen’s steep decline and then rebounded through Wednesday before the FOMC announcement and after surprise inflation drops in the UK (overall) and Germany (PPI). Hopes of more moderate monetary policy faded, however, with both the Fed and the BoE leaving rates unchanged but indicating rates would likely need to be maintained at current levels for longer than markets expected. (This higher-rates-for-longer message was also delivered by ECB officials earlier in the week.) Weaker-than-expected euro zone economic activity and falling consumer sentiment seemed to support stock markets Friday, ameliorating - at least partially – higher-rates-for-longer concerns. For the week, the FTSE 100 Index decreased 0.4% to 7,683.91, the STOXX 600 Index 1.9% to 453.26, the 10-year Gilt rate fell 11bps to 4.25%, the 10-year Bund rate rose 7bps to 2.74%, the British pound and the euro weakened 1.2% and 0.1%, respectively, both versus the U.S. dollar.
Top performing ETPs over the week
| . | 3x Long ETPs | 3x Short ETPs | ||
|---|---|---|---|---|
| UK | +3x Lloyds (3LLL) | +14.3% | -3x Barclays (3SBC) | +12.2% |
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The Long and Short of it, week ending 22 Sep 2023
