Charles-Henry Monchau

Chief Investment Officer


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WEEKLY SUMMARY: From “inflation scare” to “growth scare”

The major US equities benchmarks closed lower, as investors reacted to the busiest week of the quarterly earnings reporting season and disappointing monthly economic data. Furthermore, the BOJ’s decision to hike rates and turn hawkish after nearly 18 years stunned investors and led to a massive short squeeze. The recent rotation toward value stocks and small-caps stalled, at least in part, as the small-cap Russell 2000 Index pulled back sharply at the end of the week, recording its worst week since March 2023. However, an equal-weighted version of the S&P 500 Index held up better than its market-weighted counterpart, suggesting that the market’s performance continued to broaden away from the so-called Magnificent Seven and other Tech mega-caps. Relatedly, the Nasdaq Composite pulled back over 10% from its July high, putting it in a technical correction (now down 4 weeks in a row). US longer-term interest rates plummeted in the aftermath of both the ISM manufacturing print and the jobs data, sending the yield on the benchmark 10-year Treasury note to its lowest intraday level (3.79%) since late December. The pan-European STOXX Europe 600 Index ended the week 2.92% lower. Japan’s stock markets suffered heavy losses, with the Nikkei 225 Index falling 4.7% and the broader TOPIX Index down 6.0%. On the monetary policy side, the BoJ both raised key interest rates and detailed plans to taper bond purchases while the BoE cut rates. On the political font, Kamala overtakes Trump in the prediction markets...


Have a great week-end

Charles for the team 
 
 
 




 

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