The Long and Short of it, week ending 08 Mar 2024
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All 3 major stock indexes finished the week lower, pulling back from recent highs on no real news. Uncertainty before Fed Chair Powell’s testimony before Congress Wednesday and Thursday and Friday’s payroll report reduced risk-on appetite, pushing all 3 indexes at least 1% lower with tech stocks (excluding Nvidia) bearing the brunt of the downturn and as a result, the Nasdaq Composite Index as well. Powell’s testimony Wednesday and Thursday in which he stated the Fed may soon be in a position to cut rates helped push longer-term Treasury rates lower and stock indexes higher. Friday’s mixed payroll report, showing a larger-than-expected increase in jobs created but slower-than-expected wage growth and a higher-than-expected unemployment rate, ended up moving indexes lower to close the week lower. For the week, the S&P 500 Index decreased 0.3% to 5,123.69, the Nasdaq Composite Index fell 1.2% to 16,085.11, the Dow Jones Industrial Average lost 0.9% to close at 38,723.15, the 10- year U.S. Treasury rate fell 10bp to 4.08% and the U.S. dollar (as measured by the ICE U.S. Dollar index – DXY) weakened 1.1%.
European stock indexes were mixed with the STOXX 600 Index noticeably outperforming the FTSE 100 Index. Indexes moved lower early last week, pressured by uncertainty surrounding Fed Chair Powell’s congressional testimony Wednesday and Thursday, Wednesday’s UK pre-election budget announcement, Thursday’s ECB rate decision and Friday’s U.S. payroll report. As in the U.S., markets moved higher Wednesday and Thursday responding to dovish Powell testimony that the Fed may soon be positioned to lower rates. Thursday’s asexpected ECB rate decision (no change in rates) but unexpected significant reduction in its 2024 inflation projections also bolstered stock prices, pushing the STOXX 600 Index 1% higher on the day. While the UK preelection budget announcement helped support stock prices, the FTSE 100 Index, with less exposure to tech stocks and more exposure to commodity prices and U.S. dollar revenues, moved lower through the end of the week, hindered by falling oil prices and a weaker U.S. dollar. For the week, the STOXX 600 Index increased 1.1% to 503.26, the FTSE 100 Index decreased 0.3% to 7,659.74, 10-year Gilt and Bund rates fell 14bps to 3.98% and 2.27%, respectively and the British pound and euro strengthened 1.6% and 0.9%, respectively, both with respect to the U.S. dollar.
Top performing ETPs over the week
| . | 3x Long ETPs | 3x Short ETPs | ||
|---|---|---|---|---|
| UK | 3x Glencore (3LGL) | +14.4% | -3x Diageo (3SDO) | +9.7% |
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The Long and Short of it, week ending 08 Mar 2024
