The Long and Short of it, week ending 08 Dec 2023
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While stock markets mainly moved higher last week, gains were relatively muted. The Nasdaq Composite Index outperformed the S&P 500 Index and the Dow Jones Industrial Average, benefiting from increased AI interest and expectations as well as from continued expectations of Fed rate cuts beginning next year. A resilient U.S. economy (illustrated by a stronger-than-expected payroll report and improving consumer sentiment) along with tempering inflation, seems to have supported hopes for a “soft-landing” while at the same time increasing uncertainty regarding future Fed monetary policy and longer-term rate levels. The 10-year Treasury rate, for example, ended the week almost unchanged after falling 10bps through Wednesday. For the week, the S&P 500 Index increased 0.2% to 4,604.37, the Nasdaq Composite Index rose 0.8% to 14,403.97, the Dow Jones Industrial Average was practically unchanged at 36,247.74, the 10-year U.S. Treasury rate increased 2bps to 4.23% and the U.S. dollar (as measured by the ICE U.S. Dollar index – DXY) strengthened 0.7%.
European stock indexes continued their move higher last week, with the STOXX 600 Index reaching an almost 2- year high and outperforming the FTSE 100 Index. The STOXX 600 Index benefited from sharply rising German stock prices (seemingly propelled higher on weaker-than-expected German economic data) and dovish comments proffered by a typically hawkish ECB official (Isabel Schnable). Lower-than-expected German inflation and a weaker-than-expected German Industrial Production release increased market expectations of ECB rate cuts next year, bolstering both the DAX and the STOXX 600 Index. Early week declines in the FTSE 100 Index due to lower oil and base metal prices, were offset by gains later in the week after stronger-than-expected Chinese export numbers and rising oil prices after Saudi Arabia and Russia called for other OPEC+ members to reduce production. For the week, the FTSE 100 Index increased 0.3% to 7,554.37, the STOXX 600 Index rose 1.3% to 472.26, the 10- year Gilt rate fell 10bps to 4.04%, the 10-year Bund rate dropped 9bps to 2.27%, the British pound and euro weakened 1.2% and 1.1%, respectively, both versus the U.S. dollar.
Top performing ETPs over the week
| . | 3x Long ETPs | 3x Short ETPs | ||
|---|---|---|---|---|
| UK | +3x Rolls Royce (3LRR) | +13.5% | -3x Vodafone (3SVO) | +10.3% |
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The Long and Short of it, week ending 08 Dec 2023
