Global Market News

Global Equities Mixed

Global equities were mixed this week as tech companies declined amid a rotation into small-cap and value stocks. The Dow Jones increased 0.72% on the week while the S&P 500 and Nasdaq fell 1.97% and 3.65%, respectively. The US 10-year Treasury note reversed, climbing back up to 4.24%. On the other hand, the price of a barrel of West Texas Intermediate crude oil continued its decline, ending the week at $80.13. Volatility, as measured by the CBOE Volatility Index, rose several points to 16.52.

Market Shift is Underway as Investors Anticipate Rate Cuts

Market volatility picked up this week as investors began shifting funds out of large-cap growth stocks and into small-cap value stocks, signaling a broadening of the market rally. The Russell 2000 Index, which tracks a group of 2,000 small-cap US stocks, is up more than 7% this month while the tech-heavy Nasdaq is negative on the month. Increasing expectations of an interest rate cut in September have encouraged investors about the lending and growth environment for smaller companies. See our Image of the Week section below for a closer look.

Updated Market Figures

International Developments

China’s Third Plenum Shows Little Indication of Needed Stimulus for Struggling Economy

The recent Third Plenum in China left stock traders with few reasons to be optimistic, as it offered little indication of major stimulus to boost demand or address the property slump. Investors are now turning their attention to the upcoming Politburo meeting and the earnings season, with expectations for more detailed economic guidelines and potential stimulus support. Chinese stocks are expected to remain volatile, caught between economic struggles and geopolitical tensions, particularly with the potential for a second Trump presidency. The MSCI China Index has fallen significantly, with onshore stocks performing slightly better due to increased activity in ETFs favored by the national team, although this support is unlikely to trigger a market rally, according to Bloomberg.

PM Starmer Looks to Mend UK relationship with EU in Meeting at Blenheim Palace

British Prime Minister Keir Starmer hosted a summit at Blenheim Palace, the birthplace of Sir Winston Churchill, aiming to reset the UK’s relationship with Europe after years of Brexit-related tensions. Starmer, who opposes rejoining the EU, emphasized collaboration with European leaders and received positive feedback from figures like French President Emmanuel Macron and Spanish Prime Minister Pedro Sánchez. The summit, marked by symbolic gestures and discussions on security and migration, highlighted a shift in tone from previous Conservative governments. Starmer’s stance on international law and his approach to immigration also garnered approval, suggesting a potential easing of UK-EU relations.

Bangladesh Imposes Internet Blackout Amid Student Protests

Bangladesh has imposed a communications blackout, blocking mobile internet access and news broadcasts as protests led by students demanding an end to discriminatory job quotas escalate. The protests, sparked by opposition to a system reserving 30% of government jobs for veterans’ families, have resulted in 39 deaths this week and widespread violence, including the storming and burning of the state broadcasting headquarters. Prime Minister Sheikh Hasina ordered the indefinite closure of universities and colleges, but her actions and remarks have further inflamed tensions, leading to broader anti-government sentiments. The unrest reflects deep political and economic frustrations, with youth unemployment high and limited avenues for public dissent.

US Social & Political Developments

Trump Survives Assassination Attempt, Selects Ohio Senator JD Vance as Running Mate

On July 13th, Thomas Matthew Crooks attempted to assassinate Donald J. Trump during his rally in Butler, Pennsylvania, firing an AR-15 rifle from a roof 150 yards away before being killed by Secret Service counter-fire. Despite reports that rally attendees tried to alert security personnel, the Secret Service and local law enforcement are being blamed for the incident, leading to calls for Secret Service Director Kimberly Cheatle’s resignation. Former President Trump survived the ordeal despite being shot in the ear and, on the first day of the Republican National Convention, announced on Truth Social that Ohio Senator JD Vance would be his running mate. Senator Vance, known for his protectionist views, represents a faction of the Republican Party that appeals to Trump’s loyal base.

Biden Set to Endorse Major Changes to Supreme Court Amid Increasing Calls to Drop Out of Presidential Race

President Biden is preparing to endorse significant changes to the Supreme Court, including legislation for term limits for justices and an enforceable ethics code, as well as a constitutional amendment to eliminate broad immunity for presidents and other constitutional officeholders. This shift, previewed during a call with the Congressional Progressive Caucus, comes in response to growing outrage over recent ethics scandals and decisions by the new court majority on issues like abortion and federal regulatory powers. While these proposals face long odds in Congress, Biden’s plans mark a major departure from his previous stance on the high court. Following a controversial Supreme Court ruling granting Trump immunity from prosecution for official acts during his first term, Biden has consulted with constitutional scholars, including Harvard’s Laurence Tribe, to discuss potential reforms. Meanwhile, President Biden is facing increasing calls from senior figures within the Democratic Party to drop out of the presidential race in favor of a younger candidate.

Corporate/Sector News

CrowdStrike’s Flawed Software Update Sparks Global Computer Outages Affecting Travel and Services

A flawed software update by the cybersecurity company CrowdStrike caused major global computer outages on Friday, affecting airlines, hospitals, emergency services, and other businesses. The update, when installed on Microsoft Windows systems, caused machines to crash, leading to widespread disruptions including flight cancellations, 911 service failures, and issues within the UK’s National Health Service. The incident underscored the vulnerability of the world’s reliance on key tech firms like Microsoft and CrowdStrike, as a single software flaw had immediate and extensive repercussions. CrowdStrike’s CEO, George Kurtz, apologized and released a fix, but full restoration of systems may take time.

Alphabet Negotiating to Acquire Israeli Cybersecurity Firm Wiz for $23B

Google’s parent company, Alphabet, is negotiating to acquire the Israeli cyber-security startup Wiz for $23 billion, marking Alphabet’s largest acquisition and the biggest ever in the cyber-security sector. Wiz, founded in 2020 by former Israeli soldiers, rapidly grew its annualized sales from $100 million in late 2022 to $350 million in 2023, driven by its cloud security technology. The acquisition aims to bolster Alphabet’s relatively modest cyber-security business, which lags behind Microsoft’s $20 billion annual cyber-security revenue. Alphabet hopes that integrating Wiz will enhance its competitive edge by enabling clients to assess threats across multiple cloud platforms, a critical capability as businesses increasingly adopt multi-cloud environments.

New EU Legislation Mandates that all New Cars Must be Equipped with Speed-limiting Technology

The European Union has mandated that all new cars sold must be equipped with speed-limiting technology, called the Intelligence Speed Assistance (ISA) system, starting in July 2024. This legislation aims to improve road safety by automatically adjusting vehicles’ speeds to comply with legal limits, potentially reducing traffic accidents and fatalities. However, this rule has been applied to models of cars in Europe since 2022. The speed limiters will use a combination of GPS data and traffic sign recognition to determine and enforce appropriate speed limits. Major car manufacturers like Volkswagen, Stellantis, and Hyundai are affected by this regulation, which reflects a broader trend towards integrating advanced safety features in vehicles to enhance public safety on European roads. Through this mandate, the EU seeks to halve the number of road deaths within its territory by 2030.

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