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The Long and Short of it, week ending 24 Nov 2023

Posted: 29 November, 2023

Topic: Telecoms , Financials , Basic Materials , Energy , Industrials , Technology

Publication Type: Market Commentaries

The Long and Short of it, week ending 24 Nov 2023

Major stock market indexes moved higher yet again last week. Stable longer-term Treasury rates (at levels significantly below 5%) and more weak economic data (falling home sales, PMI job cuts) provided the major impetus for the move higher, bolstering expectations of sooner-than-previously expected rate cuts. Interestingly, the Nasdaq Composite Index fared the worst last week, affected more by earnings concerns (after Nvidia delayed chip design and production for the Chinese market) than rate outlooks. The Dow Jones Industrial Average performed the best last week despite concerns surrounding consumer spending, perhaps buoyed by less techstock exposure. For the week, the S&P 500 Index rose 1.0% to 4,559.34, the Nasdaq Composite Index increased 0.9% to 14,250.09 the Dow Jones Industrial Average gained 1.3% to 35,390.57, the 10-year U.S. Treasury rate increased 3bps to 4.47% and the U.S. dollar (as measured by the ICE U.S. Dollar index – DXY) weakened 0.5%.

European stock markets were mixed last week with the STOXX 600 Index moving higher and the FTSE 100 Index falling slightly. Stable longer-term euro zone rates (in the face of cooling inflation) and restrained economic data (i.e., “weakish”) bolstered stock prices on continued expectations of peak rates and despite hawkish jawboning by ECB officials. The FTSE 100 Index, with its large exposure to U.S. dollar-based revenue and energy/commodities, faltered on lower commodity prices and an even stronger British pound. For the week, the FTSE 100 Index decreased 0.2% to 7,488.2, the STOXX 600 Index rose 0.9% to 459.98, the 10-year Gilt rate rose 22bps to 4.32%, the 10-year Bund rate increased 6bps to 2.64% and the British pound and the euro strengthened 1.1% and 0.3%, respectively, versus the U.S. dollar.