The Long and Short of it, week ending 15 Mar 2024
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Major stock market indexes finished lower again last week. The Nasdaq Composite Index performed the worst falling just under 1% while the Dow Jones Industrial Average finished only slightly lower. An as-expected headline CPI release Tuesday (along with a slightly higher-than-expected core CPI release) initially propelled stock prices higher with expectations of a June rate cut remaining mostly intact. That sentiment weakened Wednesday amidst growing uncertainty of the timing and extent of Fed rate cuts. Thursday’s higher-than-expected PPI release accentuated that uncertainty driving all 3 major stock indexes lower Thursday and Friday. 10-year Treasury rates, reflecting increased higher-rates-for-longer expectations, rose over 20bps with almost the entire increase coming from rising 10-year real rates. For the week, the S&P 500 Index decreased 0.1% to 5,117.09, the Nasdaq Composite Index fell 0.7% to 15,973.17, the Dow Jones Industrial Average was practically unchanged at 38,714.77, the 10-year U.S. Treasury rate rose 23bp to 4.31% and the U.S. dollar (as measured by the ICE U.S. Dollar index – DXY) appreciated 0.7%.
European stock indexes moved higher last week, outperforming their U.S. counterparts. The FTSE 100 Index slightly outperformed the STOXX 600 Index, bolstered by slowing wage and employment growth and an asexpected increase in GDP. Good corporate earnings reports and cooling inflation expectations helped move the STOXX 600 Index higher. While both the euro zone and UK markets continue to expect central bank rate cuts this year, UK expectations are slightly higher. Interestingly, 10-year Gilt and Bund rates rose last week, perhaps in sympathy with rising U.S. 10-10-year Treasury rates though both the British pound the euro weakened with respect to the U.S. dollar. For the week, the STOXX 600 Index increased 0.3% to 504.80, the FTSE 100 Index rose 0.9% to 7,727.42, the 10-year Gilt rate rose 12bps to 4.10, the 10-year Bund rates increased 17bps to 2.44% and the British pound and the euro weakened 0.9% and 0.5%, respectively, both with respect to the U.S. dollar.
Top performing ETPs over the week
| . | 3x Long ETPs | 3x Short ETPs | ||
|---|---|---|---|---|
| UK | 3x Glencore (3LGL) | +18.2% | -3x Vodafone (3SVO) | +1.7% |
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The Long and Short of it, week ending 15 Mar 2024
