The Long and Short of it, week ending 31 March 2023

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Publication Type: Market Commentaries
The Long and Short of it, week ending 31 March 2023

Except for Tuesday, major stock market indexes moved higher each day last week with the S&P 500 Index, Nasdaq Composite Index and the Dow Jones Industrial Average registering almost identical performances. Last week’s move higher mainly centered on lessened banking-sector concerns (with the week starting on news First Citizens Bank purchased Silicon Valley Bank) and on increased expectations the Fed would pause rate increases (and perhaps even ease this year). Continued low initial jobless claims, greater-than-expected pending home sales and a better-than-expected PCE Price Index release (Friday) added to risk-on sentiment as well. 10-year Treasury rates moved 11bps higher last week, reflecting diminished safe-haven demand as rates moved off their recent lows while the U.S. dollar continued to weaken. For the week, the S&P 500 Index increased 3.4% to 4,105.80 the Nasdaq Composite Index also increased 3.4% to 12,221.91, the Dow Jones Industrial Average increased 3.2% to 33,273.10, the 10-year U.S. Treasury rate rose 11bps to 3.48% and the U.S. dollar (as measured by the ICE U.S. Dollar index – DXY) weakened 0.5%.

European stock indexes also rose last week with the STOXX 600 Index strongly outperforming the FTSE 100 Index. Lessened banking-sector concerns and strong performances in real estate and commodity-related stocks helped move both indexes higher. First Citizens Bank purchase of Silicon Valley Bank and news of the return of Sergio Ermotti as UBS CEO bolstered bank stock sentiment as did the partial rebound of Deutsch Bank’s stock price. Higher oil, base metal and grains prices lifted commodity-related stocks and sharply recovering real-estate stock prices also bolstered index values. Increasing German consumer sentiment and positive sales expectations for UK retailers buoyed risk-on sentiment though concerns of euro zone core price inflation (especially in Germany) added to central bank policy uncertainty, tempering investor sentiment. Partially Reflecting this uncertainty (and also as a result of diminished safe-haven demand), longer-term German and UK government rates rose with the 10-year Gilt rate increasing 21bps and the 10-yr Bund rate rising 18bps. For the week, the STOXX 600 Index increased 4.0% to 457.84, the FTSE 100 Index rose 3.1% to 7,631.74, the 10-year Gilt rate rose 21bps to 3.49%, the 10-year Bund rate increased 18bp to 2.30% and the British pound and euro strengthened 0.9% 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 Barclays (3LBC) +28.0 % -3x Diageo (3SDO) -1.2%
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The Long and Short of it, week ending 31 March 2023