The Long and Short of it, week ending 26 Jan 2024

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Publication Type: Market Commentaries
The Long and Short of it, week ending 26 Jan 2024

Another up-week for stock markets with all 3 major indexes gaining at least 0.7%. Tech stock performance was the main factor driving indexes higher last week with Microsoft (MSFT) becoming the second stock to reach a $3 trillion market cap. Netflix and IBM also contributed to last week’s performance while Tesla, Goldman, 3M and Home Depot detracted. While Thursday’s Q1 GDP release was much better-than-expected (increasing Fed rate-cut uncertainty after Wednesday’s improved S&P Composite PMI release), the report also showed slowing inflation with a lower-than-expected Q1 core and headline PCE Price Index change (effectively negating the stronger-thanexpected GDP release). Markets mainly moved lower Friday, brushing off a lower-than-expected PCE Price Index release, focusing on Intel’s weak Q1 sales outlook, moving most chip stocks lower. For the week, the S&P 500 Index rose 1.1% to 4,890.97, the Nasdaq Composite Index gained 0.9% to 15,455.36, the Dow Jones Industrial Average increased 0.7% to 38,109.43, the 10-year U.S. Treasury rate increased 1bp to 4.14% and the U.S. dollar (as measured by the ICE U.S. Dollar index – DXY) strengthened 0.2%.

European stock markets moved higher as well last week, noticeably outperforming U.S. stock markets. Markets initially moved higher on strong tech stock performance, though perhaps capped by uncertainty surrounding Thursday’s ECB rate decision and by lack of clarity regarding Chinese stimulus plans. Wednesday’s BoC announcement, significantly reducing required cash reserves for banks, worked to move the STOXX 600 and FTSE 100 Indexes higher on the back of strong mining and luxury stock performance. Thursday’s as-expected ECB decision (rates unchanged) along with slightly dovish Lagarde comments supported euro zone stock markets while a weaker-than-expected UK retail sales report seemed to support UK prices (bad news is good news with respect to BoE rate cut timing). Both indexes moved higher Friday supported by spirit and luxury stocks performance with LMVH and Remy Cointreau releasing better-than-expected earnings reports. For the week the FTSE 100 Index rose 2.3% to 7,635.09, the STOXX 600 index gained 3.1% to 483.84, the 10-year Gilt rate rose 4bp to 3.97%, the 10-year Bund rate was unchanged at 2.30%, the British pound was unchanged and the euro weakened 0.4%, both versus the U.S. dollar.

Top performing ETPs over the week

 

The Long and Short of it, week ending 26 Jan 2024