The Long and Short of it, week ending 15 Sep 2023
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Stock markets started last week on a positive note, climbing on reports of Tesla’s supercomputer development to power its driverless-system capabilities. Markets retreated slightly Tuesday following Oracle’s downbeat guidance/forecast but continued higher Wednesday and Thursday after a mainly-as-expected CPI release Wednesday, powered by hopes of a resilient economy despite continued vigilance from the Fed. Friday, however, saw that optimism fade, triggered by a disappointing Adobe earnings report, a sustained rally in oil prices and a surprise decline in consumer sentiment. All 3 major stock market indexes, up 1% through Thursday, experienced sharp declines, driving both the S&P 500 and Nasdaq Composite Indexes slightly into the red and Dow Jones Industrial Average to almost unchanged. For the week, the S&P 500 Index decreased 0.2% to 4,450.32, the Nasdaq Composite Index dropped 0.4% to 13,704.70, the Dow Jones Industrial Average increased 0.1% to 34,618.77, the 10-year U.S. Treasury rate rose 7bps to 4.33% and the U.S. dollar (as measured by the ICE U.S. Dollar index – DXY) strengthened 0.2%.
European stock markets moved higher last week with the FTSE 100 Index sharply outperforming the STOXX 600 Index. Markets were subdued through Wednesday last week, with both the STOXX 600 and FTSE 100 Indexes benefiting from positive bank-loan and inflation data out of China. Oracle’s weak guidance Tuesday pushed the tech heavy STOXX 600 Index lower as well while a weaker pound and rising commodity prices helped move the FTSE 100 Index higher. Weak economic data from both the euro zone (weaker-than-expected industrial production) and the UK (contracting economic output) increased concerns of recession, boosting hopes of peakrates and, as a result, flooring losses. Thursday’s as-expected ECB rate hike but widely unexpected signalling future rate hikes would likely be limited, pushed European markets markedly higher with the STOXX 600 Index increasing 1.5% and the FTSE 100 Index climbing just under 2% (assisted by rising mining and energy stocks). Markets continued higher Friday as well. For the week, the FTSE 100 Index increased 3.1% to 7,711.38, the STOXX 600 Index rose 1.6% to 461.92, the 10-year Gilt rate fell 7bps to 4.36%, the 10-year Bund rate rose 7bps to 2.67%, the British pound and the euro weakened 0.7% and 0.4%, respectively, both versus the U.S. dollar.
Top performing ETPs over the week
| . | 3x Long ETPs | 3x Short ETPs | ||
|---|---|---|---|---|
| UK | +3x Rio Tinto (3LRI) | +29.3% | -3x Diageo (3SDO) | +3.9% |
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The Long and Short of it, week ending 15 Sep 2023
