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Review 05Feb - 09Feb24: Another Week, Another Record: Tech and US Large Caps Soar as S&P 500 Surpasses 5,000; CSI 1000 Rallies After Nearing All-Time Low Amid Hopes for Policy Stimulus

Risk markets were overall supported, with US equities reaching new all-time highs: the S&P 500 increased by 1.37% and the Nasdaq 100 by 1.81%. This time, small caps (Russell 2000) joined the rally, outperforming large caps and tech sectors with a 2.41% gain. European equities had a mixed performance, with the CAC40 up by 0.73%, the DAX virtually unchanged (+0.05%), and the FTSE100 down by 0.56%. Sector-wise, technology (+2.77%), consumer discretionary (+1.45%), and healthcare (+1.42%) drove the positive performance, while utilities (-1.98%) and consumer staples (-1.43%) were the primary drags.

In emerging markets, China's CSI 1000 index neared its all-time lows, just above the 4,000 mark, before rebounding sharply following the replacement of the head of the securities regulator. The MSCI China index concluded the week with a significant gain of 7.36%.

Regarding decisions by developed market (DM) central banks, the Reserve Bank of Australia (RBA) concluded its policy meetings, maintaining rates at 4.35% but signaling a shift to a more dovish stance, echoing earlier sentiments from other major central banks. Emerging market (EM) central banks in India, Thailand, Mexico, and Poland kept rates unchanged this week, while the central banks of Peru and Czechia cut rates by 25 and 50 basis points, respectively.

Bond yields across both developed and emerging markets trended higher last week, with no significant changes in the yield curvature in DMs outside of New Zealand. US 2-year yields rose by 12 basis points, while 5, 10, and 30-year yields increased by 15 basis points.

The US Dollar struggled to maintain its strong momentum after the Non-Farm Payroll (NFP) release. In developed markets, the EUR/USD ended the week flat with a slight increase of +0.06%, while the USD/JPY rose by 0.51% and the USD/CHF by 0.88%. The Norwegian Krone (NOK) and Swedish Krona (SEK) recovered strongly, with the USD/NOK and USD/SEK down by 0.82% and 0.7%, respectively. USD strength in emerging markets was more widespread, with significant rises in USD/CLP (+4.76%), USD/PEN (+2.15%), USD/CZK (+1.98%), and USD/HUF (+1.36%). Conversely, the USD/KRW was down by 0.47% and USD/MXN by 0.4%. Key data releases of last week:

  • German Trade Balance Recovers to Pre-Pandemic Levels (read more here)

  • A Resilient US Service Sector: Strong Expansion and Rising Costs in January (read more here)

  • RBA stays Put, Signals Pivot to Data Dependency (read more here)

  • Canada Ivey Rises to 9-Month High as BoC stays Put (read more here)

  • China Faces Deflation Dilemma: Urgent Policy Action Needed to Revive Economic Sentiment and Demand (read more here)

  • Latin Inflation On Course to Reach Targets: More Cuts to Follow (read more here)

  • EM Central Bank Policy Update: Banxico and NBP Stay Put, Peru and CNB Cut (read more here)

  • CFTC Leveraged Money Positioning Update for the Week to Feb06 (read more here)


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