The Long and Short of it, week ending 16 Feb 2024
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Markets moved lower last week, this time with the Dow Jones Industrial Average noticeably outperforming the Nasdaq Composite Index. Tuesday’s higher-than-expected CPI release was the primary force pulling stock prices lower early last week. Prices rebounded Wednesday and Thursday, benefiting from both a weaker-than-expected retail sales report and a re-evaluation of the CPI release (i.e., CPI may have been higher due to certain one-time factors). Indexes, however, moved lower again on Friday following a higher-than-expected PPI release and despite a much weaker-than-expected housing starts report. 10-year Treasury rates, reflecting increasing higherrates-for-longer expectations moved higher with increased inflation expectations accounting for about 70% of that move. For the week, the S&P 500 Index fell 0.4% to 5,005.57, the Nasdaq Composite Index dropped 1.3% to 15,775.65, the Dow Jones Industrial Average decreased 0.1% to 38,627.99, the 10-year U.S. Treasury rate rose 11bp to 4.29% and the U.S. dollar (as measured by the ICE U.S. Dollar index – DXY) strengthened 0.2%.
European stock indexes moved markedly higher last week, moving higher each day except Tuesday when European markets reacted to a higher-than-expected U.S. CPI release. A lower-than-expected UK CPI release and strong French and German earnings reports worked to move both the STOXX 600 and FTSE 100 Indexes higher Wednesday and Thursday. Weak UK GDP data (contracting more than expected) combined with dovish ECB officials’ comments added to upward price pressure as well. The FTSE 100 Index also benefited from rising mining stocks, buoyed by higher base metal prices (which benefited from growing expectations of Chinese stimulus). 10- year Gilt and Bund rates, lower on the week through Thursday, moved slightly higher on the week Friday following a stronger-than-expected UK retail sales release. For the week the FTSE 100 Index gained 1.8% to 7,711.71, the STOXX 600 Index rose 1.4% to 491.58, the 10-year Gilt and Bund rate rose 2bps to 4.11% and 2.40%, respectively, and the British pound and the euro decreased 0.1%, both with respect to the U.S. dollar.
Top performing ETPs over the week
| . | 3x Long ETPs | 3x Short ETPs | ||
|---|---|---|---|---|
| UK | 3x Lloyds Banking Group (3LLL) | +12.8% | -3x BP (3SBP) | +0.6% |
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The Long and Short of it, week ending 16 Feb 2024
