The Long and Short of it, week ending 05 August 2022

Publication Type: Market Commentaries

Stock prices mainly moved higher last week with the Nasdaq Composite Index strongly outperforming the Dow Jones Industrial Average and the SP 500 Index. The Dow Jones Industrial Average finished slightly lower on the week. Geo-political concerns dominated stock markets early in the week. Speaker of the House Nancy Pelosi’s vist to Taiwan and China’s strong condemnation of it pushed stock prices lower and bond and gold prices higher as investors sought haven-type investments. Wednesday’s strong ISM Services report and Friday’s much betterthan-expected jobs report renewed concerns of continued aggressive Fed tightening capping stock gains, driving the 10-year Treasury rate higher and strengthening the U.S. dollar. The 10-year Treasury rate increased 17bps over the week with a 25bp increase in 10-year real rates offset by an 8bp decline in 10-year inflation expectations. For the week, the S&P 500 Index increased 0.4% to 4,145.19, the Nasdaq Composite Index rose 2.1% to 12,657.55, the Dow Jones Industrial Average edged lower 0.1% to 32,801.51, the 10-year U.S. Treasury rate rose 17bps to 2.82% and the U.S. dollar (as measured by the ICE U.S. Dollar index - DXY) strengthened 0.7%.

European stock markets were mixed with the FTSE 100 index slightly rising and the STOXX 600 Index slightly falling. Both indexes fell early in the week affected by falling oil and gas prices and China’s aggressive response to Speaker of the House Pelosi’s visit to Taiwan and then somewhat recovered Wednesday as Taiwan-related tensions fell and BP reported much better than expected earnings and raised its dividend. Thursday’s as-expected 50bp BoE rate hike seemingly had little effect on markets but its negative outlook on growth and warnings of the UK economy falling into recession by the end of the year capped gains the remainder of the week while weakening the British pound versus the U.S. dollar. The 10-year UK government rate and the 10-year Bund rate increased 19bps and 13bps, respectively, last week. At week’s end, the FTSE 100 Index increased 0.2% to 7,439.74, the STOXX 600 Index decreased 0.6% to 435.72, the 10-year UK government rate rose 19bps to 2.06%, the British pound and the euro weakened 0.8% and 0.4%, respectively, both with respect to the U.S. dollar.

Top performing ETPs over the week

. 3x Long ETPs 3x Short ETPs
UK +3x Barclays (3LBC) +13.2 % -3x Rolls-Royce (3SRR) +18.0%
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The Long and Short of it, week ending 05 August 2022

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