The Long and Short of it, week ending 09 Feb 2024

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Publication Type: Market Commentaries
The Long and Short of it, week ending 09 Feb 2024

Major stock indexes moved higher again last week with the Nasdaq Composite Index significantly outperforming the S&P 500 Index and, in particular, the Dow Jones Industrial Average. The week started on a down beat, with stock markets reacting to hawkish Powell comments Sunday and stronger-than-expected service sector growth. Stock indexes, however, moved higher the remainder of the week, predominantly propelled by strong tech stock performance despite markedly higher long-term Treasury rates. While rate cut expectations declined and Treasury rates rose, tech stocks (in particular Nvidia) rose to new highs, bolstered by growing “soft-landing” expectations. The S&P 500 Index closed above 5,000 for the first time. For the week, the S&P 500 Index rose 1.4% to 5,026.61, the Nasdaq Composite Index gained 2.3% to 15,990.66, the Dow Jones Industrial Average was almost unchanged at 38,671.30, the 10-year U.S. Treasury rate rose 16bp to 4.08% and the U.S. dollar (as measured by the ICE U.S. Dollar index – DXY) strengthened 0.2%.

European stock indexes were mixed with the STOXX 600 Index slightly higher and the FTSE 100 Index slightly lower. Index performance suffered from hawkish Fed, BoE and ECB officials’ comments calling for caution with respect to rate cuts. Energy stocks bolstered the performance of both indexes, rising with both sharply higher energy prices and a much better-than-expected BP earnings reports Luxury stocks also supported indexes, supported by Chinese government plans to support the stock market. Better-than-expected UK economic date (i.e., better-thanexpected service sector growth and unemployment rates) contrasted with euro zone data indicating weakness particularly in Germany (i.e., slowing industrial production and demand). 10-year Gild and Bund rates rose markedly, reflecting reduced rate-cut expectations. For the week the FTSE 100 Index decreased 0.6% to 7,572.58, the STOXX 600 Index increased 0.2% to 48482, the 10-year Gilt rate rose 17bps to 4.09%, the 10-year Bund rate increased 15bps 2.38% and the British pound and the euro were unchanged with respect to the U.S. dollar.

Top performing ETPs over the week

. 3x Long ETPs 3x Short ETPs
UK 3x Long BP (3LBP) +12.2% 3x Short Vodafone (3SVO) +27.6%
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The Long and Short of it, week ending 09 Feb 2024