The Long and Short of it, week ending 06 April 2023
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A mixed week for stocks with the Nasdaq Composite Index ending lower on the week, the S&P 500 Index basically unchanged and the Dow Jones Industrial Average finishing the week slightly higher. Monday opened to news of OPEC+’s surprise 1.2 million bpd production cutback, sending oil prices sharply higher and, as a result, pushing oil stocks and the Dow Jones Industrial Average and S&P 500 Index higher as well. Weak economic data throughout the week while increasing expectations of less aggressive Fed monetary also raised the spectre of recession, resulting in mixed effects on stock prices. Weaker-than-expected ISM Manufacturing and Services Index releases, a pronounced drop in job openings and higher-than-expected initial jobless claims all helped to move Treasury rates lower while arousing concerns regarding earnings (especially for growth stocks) and economic growth. Higher oil prices – up almost 7% on the week – added to economic growth and inflation concerns, capping stock price gains. Reflecting growth concerns and expectations of easier Fed monetary police, 10-year Treasury rates fell 18bps (with real rates and inflation expectation falling equally) and the U.S. dollar weakened. For the week, the S&P 500 Index decreased 0.1% to 4,105.02 the Nasdaq Composite Index dropped 1.1% to 12,087.96, the Dow Jones Industrial Average increased 0.6% to 33,485.35, the 10-year U.S. Treasury rate fell 18bps to 3.30% and the U.S. dollar (as measured by the ICE U.S. Dollar index – DXY) weakened 0.6%.
European stock indexes moved higher last week with the FTSE 100 Index strongly outperforming the STOXX 600 Index. The commodity-heavy FTSE 100 Index, up just under 1.5% on the week, benefited from OPEC+’s surprise production cutbacks, sending oil prices and oil-linked stocks significantly higher. The FTSE 100 Index gain came despite sliding manufacturing activity, increased concerns of oil-related inflation and a stronger British pound. The STOXX 600 Index (with its larger growth/tech stock exposure) fell victim to markedly lower factory activity and continued inflationary price pressures UK markets also benefited from a still “expanding” services sector while euro zone services activity showed disparate performance across industries and companies and also showed continued elevated price pressures, subduing stock price gains. Both indexes moved higher Thursday, cueing off greater-than-expected U.S. jobless claims and increasing hopes of less aggressive Fed monetary policy. For the week, the STOXX 600 Index increased 0.2% to 458.94, the FTSE 100 Index rose 1.4% to 7,741.56, the 10-year Gilt rate fell 6bps to 3.43%, the 10-year Bund rate decreased 12bp to 2.18% and the British pound and euro strengthened 0.9% and 0.7%, respectively, both with respect to the U.S. dollar.
Top performing ETPs over the week
| . | 3x Long ETPs | 3x Short ETPs | ||
|---|---|---|---|---|
| UK | +3x Shell (3LRD) | +13.7 % | -3x Rio Tinto (3SRI) | +10.6% |
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The Long and Short of it, week ending 06 April 2023
