The Long and Short of it, week ending 19 Apr 2024
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A markedly lower week for stock markets with the Nasdaq Composite Index faring the worst, followed by the S&P 500 Index and with both of those indexes sharply underperforming the Dow Jones Industrial average. Strong economic data (including much better-than-expected retail sales, sharply higher Philly Fed Mfg Index and continued low level of initial jobless claims) along with hawkish comments from Fed Chair Powell (basically promoting higher-rates-for-longer-than-expected) drove U.S. Treasury rates to 5-month highs and tech stocks, in particular, significantly lower. Iran-Israel tensions somewhat added to risk-off sentiment with markets reacting negatively on Friday to Israel’s overnight attack on Iran. For the week, the S&P 500 Index fell 3.1% to 4,967.23, the Nasdaq Composite Index dropped 5.5% to 15,282.01, the Dow Jones Industrial Average was practically unchanged at 37,986.40, the 10-year U.S. Treasury rate rose 10bps to 4.62% and the U.S. dollar (as measured by the ICE U.S. Dollar index – DXY) strengthened 0.1%.
European stock indexes moved lower last week, primarily depressed by falling U.S. rate-cut expectations (accentuated by Fed Chair Powell’s hawkish comments Tuesday) and risk-off sentiment due to increased Mideast tensions. European index losses, however, were floored by dovish rate-cut comments by ECB President Lagarde and by BoE officials as well. The FTSE 100 Index also benefited from rising commodity prices (i.e., base and precious metals prices) with copper prices hitting a 2-year high and gold prices rising for the 5th consecutive week. For the week, the FTSE 100 Index fell 1.3% to 7,895.85, the STOXX 600 Index decreased 1.2% to 499.29, 10-year Gilt rates rose 9bps to 4.23%, 10-year Bund rates gained 14bps to 2.50%, the British pound weakened 0.7% and the euro strengthened 0.1%, both versus the U.S. dollar.
Top performing ETPs over the week
| . | 3x Long ETPs | 3x Short ETPs | ||
|---|---|---|---|---|
| UK | 3x Diageo (3LDO) | +5.2% | -3x BP (3SBP) | +14.3% |
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The Long and Short of it, week ending 19 Apr 2024
