The Long and Short of it, week ending 23 Feb 2024

Publication Type: Market Commentaries
The Long and Short of it, week ending 23 Feb 2024

Nvidia’s long-anticipated earnings report drove and directed markets last week. Prior to the report release after hours on Wednesday, stock markets moved lower, affected by an overhang of uncertainty. Markets also were influenced by Wednesday’s FOMC minutes release which revealed “too-early-to-cut-rates” sentiment, adding to downward price pressure. Losses through the close Wednesday, however, were erased Thursday with Nvidia shares rising over 16% on a much better-than-expected earnings report. The gain in Nvidia’s share price helped move all 3 major indexes into positive territory for the week with the S&P 500 Index slightly outperforming the Dow Jones Industrial Average and the Nasdaq Composite Index. Despite the hawkish FOMC minutes, 10-year Treasury rates moved slightly lower and the U.S. dollar actually weakened. For the week, the S&P 500 Index gained 1.7% to 5,088.80, the Nasdaq Composite Index rose 1.4% to 15,996.82, the Dow Jones Industrial Average increased 1.3% to 39,131.53, the 10-year U.S. Treasury rate fell 4bp to 4.25% and the U.S. dollar (as measured by the ICE U.S. Dollar index – DXY) weakened 0.3%.

European stock indexes were mixed with the STOXX 600 Index sharply outperforming the FTSE 100 Index. Both indexes moved lower through Wednesday, burdened by the overhang of Wednesday’s after-hours Nvidia earnings report as well as Wednesday’s FOMC minutes. And while both indexes suffered from lower mining and energy stock prices, the FTSE 100 Index also suffered from sharply lower HSBC share prices (in addition to its heavier mining and energy exposure). Nvidia’s much better-than-expected earnings release benefited the STOXX 600 Index more than the FTSE 100 Index, also adding to its outperformance. Both Indexes’ gains were capped by hawkish FOMC minutes and comments from ECB and BoE officials, more or less communicating that none of the central banks were in a hurry to reduce rates. 10-year Gilt and Bund rates, interestingly, moved lower over the week. For the week, the STOXX 600 Index rose 1.2% to 497.24, the FTSE 100 Index was basically unchanged at 7,706.28, the 10-year Gilt rate fell 7bps to 4.04%, the 10-year Bund rate fell 4bps to 2.36% and the British pound and the euro strengthened 0.6% and 0.4%, respectively, both with respect to the U.S. dollar.

Top performing ETPs over the week

. 3x Long ETPs 3x Short ETPs
UK 3x Barclays (3LBC) +36.0% -3x Glencore (3SGL) +19.9%
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The Long and Short of it, week ending 23 Feb 2024