Darren Sinden from educational provider Trade Uni discusses the latest market moves.
US equity markets finished last week with a flourish. However, looking at the five-day performance among the leading indices US benchmarks finished mid-table at best, outshone by the likes of Italy's MIB 40, which put on 2.6% last week and traded higher on four out of five days; in fact, it’s traded higher on all but one occasion since 4 October. The index has been led higher by the likes of Unipol and Davide Campari, which were up by 5.9% and 5.1% respectively over the last week, with Unipol up by more than 190% year-to-date.
At a sector level in Europe, last week’s biggest gainers were travel and leisure along with telecoms, both up by over 3%. At a stock level, the biggest gainers in the Euro Stoxx 50 were Nokia, up 7%, BNP Paribas, higher by 6.6%, and Airbus which gained 5%. Utilities led the way in the US last week, with the sector adding 3.42% as tech giants show interest in nuclear energy as a power source for their ever-expanding portfolio of data centres. Year-to-date the sector is the second-best performer among the 11 S&P 500 sectors, up by 29.27% with only information technology performing better. However, over the last three months, utilities is the clear winner, rallying by 16.95% and more than quadrupling the technology sector’s 3.97% gains.
At a stock level on Friday, there were impressive gains from the likes of MicroStrategy and Netflix which rallied by more than 11%, the latter on better-than-expected earnings and news of impending price rises for its streaming services. Earnings season in the US has been a mixed bag so far; approximately 70 S&P 500 companies have reported Q3 earnings and almost 80% of those reported higher-than-expected earnings, though only 64% of companies that beat on profit reported higher-than-expected revenue. Where companies have offered forward guidance, it’s been on the negative side, with nine names guiding lower compared to five guiding higher, according to Factset data. Of course, it’s early days and this week contains a swarm of earnings releases, with more than 350 releases scheduled over Wednesday and Thursday.
There were also big gains for silver-related stocks and ETFs - Pan American Silver put on 10.55%, for example - as gold and silver prices continued to test at new highs, which has continued this morning in early European trade for both precious metals. Crude oil steadied this morning, with Brent and WTI trading modestly higher after losing 5% plus last week.
The US dollar index is trading higher again this morning, up 2.65% over the last month. Is that gain saying something about the pace of US interest rate cuts during the balance of 2024 and into 2025? Or is it a sign of risk-off attitude emerging among investors, many of whom will have booked profits in risk assets year-to-date? US 10-year treasury bond yields look firmly ensconced above 4% and are trading at 4.097% this morning. Borrowing costs in the US have risen across almost all timeframes over the last month, which does not chime with the idea that US base rates are set to fall further and faster; presumably, something will have to give.
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