The Long and Short of it, week ending 09 June 2023
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As measured by the 3 major indexes, stock markets moved slightly higher last week with markets cautious before this week’s FOMC meeting and CPI release. Slightly weaker-than-expected economic data - including a weakerthan-expected ISM Services Index release and greater-than-expected initial jobless claims – helped increase expectations of a Fed pause while also diminishing concerns of a full-blown recession. Markets moved lower Wednesday with investor expectations of another Fed rate hike temporarily increasing following an unexpected rate increase by the Bank of Canada. Despite strong price performance by TSLA and NVDA last week, the Nasdaq Composite Index slightly underperformed both the Dow Jones industrial Average and the S&P 500 Index. (Small cap stocks, as measured by the Russell 2000 Index, strongly outperformed the 3 major indexes, increasing just under 2% on the week.) The change in 10-year Treasury yields moved slightly higher last week also seemingly waiting for this week’s CPI release and FOMC announcement. For the week, the S&P 500 Index increased 0.4% to 4,298.86, the Nasdaq Composite Index edged slightly higher, increasing 0.1% to 13,259.14, the Dow Jones Industrial Average rose 0.3% to 33,877.24, the 10-year U.S. Treasury rate increased 4bps to 3.74% and the U.S. dollar (as measured by the ICE U.S. Dollar index – DXY) weakened 0.4%.
Both the STOXX 600 and FTSE 100 Indexes ended the week slightly lower with investor sentiment muted by weaker-than-expected economic data (in Europe, China and the U.S.) and hawkish ECB comments in front of this Thursday’s rate announcement. The FTSE 100 Index suffered from weaker-than-expected house price data (resulting from high mortgage rates following BoE rate increases in the face of stubbornly high inflation), expectations of further BoE rate hikes and a surging British pound (versus the U.S. dollar). The FTSE 100 Index was also hurt by weak chemical stock performance following Croda International’s profit warning on Friday. The STOXX 600 Index appeared mainly to be affected by rising-rate concerns (in front of this Thursday’s ECB rate decision), weak Chinese and German economic data and euro zone recession concerns. For the week, the STOXX 600 Index decreased 0.6% to 460.02, the FTSE 100 Index decreased 0.5% to 7,562.36, the 10-year Gilt rate rose 8bps to 4.24%, the 10-year Bund rate increased 7bps to 2.38% and the British pound and euro strengthened 1% and 0.8%, respectively, both with respect to the U.S. dollar.
Top performing ETPs over the week
| . | 3x Long ETPs | 3x Short ETPs | ||
|---|---|---|---|---|
| UK | +3x Vodafone (3LVO) | +12.1% | -3x Diageo (3SDO) | +4.9% |
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The Long and Short of it, week ending 09 June 2023
