The Long and Short of it, week ending 22 Mar 2024

Topic: Technology
Publication Type: Market Commentaries

Another up-week for major stock indexes. All 3 major stock indexes climbed to new highs last week, buoyed by FOMC dot plot projections of 3 rate cuts this year, easing concerns of more restrictive Fed policy. Stock markets moved higher every day but Friday, led by growth stocks and other interest rate sensitive sectors. Despite a dovish tone from Fed Chair Powell following the FOMC meeting Wednesday, the U.S. dollar noticeably strengthened while, interestingly, the 10-year Treasury rates dropped by over 10bps. Much better-than-expected existing home sales (released Thursday) also lent support to stock prices. For the week, the S&P 500 Index rose 2.3% to 5,234.18, the Nasdaq Composite Index gained 2.9% to 16,428.82, the Dow Jones Industrial Average increased 2.0% to 39,465.64, the 10-year U.S. Treasury rate fell 11bps to 4.20% and the U.S. dollar (as measured by the ICE U.S. Dollar index – DXY) appreciated 1.0%

European stock indexes also moved higher last week with the FTSE 100 Index handily outperforming the STOXX 600 Index. European indexes benefited from dovish central bank officials’ comments amidst data showing cooling inflation. The BoE left rates unchanged as expected while BoE Governor Andrew Bailey suggested projected economic conditions allow for rate cuts. Similarly, ECB President Lagarde opined that inflation and economic conditions are moving in the right direction to permit rate cuts. Wednesday’s FOMC decision to leave rates unchanged combined with the majority of FOMC members expecting at least 3 rate cuts this year also buoyed European stock markets as did the surprise Swiss National Bank 25bp rate cut. The FTSE 100 Index, with its greater exposure to U.S. dollar revenues, also benefited from a significantly weaker British pound versus the U.S. dollar. For the week, the STOXX 600 Index increased 1.0% to 509.64, the FTSE 100 Index rose 2.6% to 7,930.92, the 10-year Gilt rate fell 13bps to 3.97, the 10-year Bund rate increased 12bps to 2.32% and the British pound and the euro weakened 1.1% 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 Rolls-Royce (3LRR) +20.3% -3x Vodafone (3SVO) +5.5%
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The Long and Short of it, week ending 15 Mar 2024