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The Long and Short of it, week ending 29 Sep 2023

Posted: 04 October, 2023

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

Publication Type: Market Commentaries

The Long and Short of it, week ending 29 Sep 2023

Somewhat of a mixed week for the 3 major stock indexes. Higher-rates-for-longer concerns, motivated by resilient economic data (including durable goods orders, jobless claims and final Q2 GDP estimate), permeated throughout the week, increasing risk-off sentiment and increasing, paradoxically, recession concerns. Interestingly, however, the Nasdaq Composite Index nicely outperformed both the Dow Jones Industrial Average and the S&P 500 Index. The outperformance is even more striking given the FTC’s anti-trust lawsuit announced early last week against Amazon. Friday’s mostly better-than-expected PCE Price Index release favoured tech stocks, lending more support to the Nasdaq Composite Index as did the accompanying move lower (off their intraweek highs) for 10- year Treasury rates (no matter how slight) and the U.S. dollar. For the week, the S&P 500 Index fell 0.7% to 4,288.05, the Nasdaq Composite Index increased 0.1% to 13,219.32, the Dow Jones Industrial Average dropped 1.4% to 33,507.75, the 10-year U.S. Treasury rate rose 14bps to 4.58% and the U.S. dollar (as measured by the ICE U.S. Dollar index – DXY) strengthened 0.6%.

Both the STOXX 600 and FTSE 100 Indexes moved lower last week, affected by many of the same factors affecting U.S. markets. “Higher-rates-for-longer” concerns enveloped markets, pushing stock prices lower and Gilt and Bund rates noticeably higher. Weak Chinese growth prospects weighed on both euro zone and UK stock markets as well, as did Jeffries downgrading a number of UK real estate firms, opining the UK commercial rental market was in a recession. Nonetheless, markets showed some backbone Thursday and Friday, moving higher on lower-thanexpected inflation releases for the both euro zone and Germany and, for the UK, a better-than-expected GDP release. For the week, the FTSE 100 Index decreased 1.0% to 7,608.08, the STOXX 600 Index fell 0.7% to 450.22, the 10-year Gilt rate jumped 20bps to 4.45%, the 10-year Bund rate rose 10bps to 2.84%, the British pound and the euro weakened 0.3% and 0.8%, respectively, both versus the U.S. dollar.