The Long and Short of it, week ending 08 Sep 2023
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Stock markets moved lower last week with the Nasdaq Composite Index registering the steepest decline versus the S&P 500 Index and the Dow Jones Industrial Average. Concerns of “higher-rates-for-longer” clouded investor outlooks, propelled by lower-than-expected initial jobless claims and a stronger-than-expected ISM Services Index release. Higher oil prices in front of next week’s CPI release added to concerns, increasing expectations of higherthan-desired inflation. Reflecting these concerns, the dollar continued to strengthen and 10-year Treasury rates rose powered by a rise in 10-year inflation expectations. For the week, the S&P 500 Index decreased 1.3% to 4,458.85, the Nasdaq Composite Index dropped 1.9% to 13,761.53, the Dow Jones Industrial Average fell 0.8% to 34,577.28, the 10-year U.S. Treasury rate increased 8bps to 4.26% and the U.S. dollar (as measured by the ICE U.S. Dollar index – DXY) strengthened 0.8%.
European stock markets were mixed with the STOXX 600 Index ending lower on the week and the FTSE 100 Index finishing higher. Both indexes suffered from slowing euro zone and Chinese business activity while the STOXX 600 Index also was stymied by increasing consumer expectations of inflation and the FTSE 100 Index was pressured lower by weakening consumer spending. Uncertainty surrounding this week’s ECB rate decision seemed to increase “risk-off” sentiment in the euro zone while talk of peak rates may have supported stock prices in the UK. The FTSE 100 Index’s larger exposure to U.S. dollar revenues and mining and energy stocks helped it perform better than the STOXX 600 Index. The STOXX 600 Index’s larger exposure to tech stocks also contributed to its underperformance relative to the FTSE 100 Index, with tech stocks hurt by the Chinese government’s ban of the iPhone. For the week, the FTSE 100 Index increased 0.2% to 7,478.19, the STOXX 600 Index fell 0.8% to 454.66, the 10-year Gilt rate was unchanged at 4.43%, the 10-year Bund rate rose 5bps to 2.60%, the British pound and the euro weakened 0.1% and the euro weakened 1.0% and 0.7%, respectively, both versus the U.S. dollar.
Top performing ETPs over the week
| . | 3x Long ETPs | 3x Short ETPs | ||
|---|---|---|---|---|
| UK | +3x BP (3LBP) | +9.7% | -3x Rio Tinto (3SRI) | +8.6% |
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The Long and Short of it, week ending 08 Sep 2023
