Global Market News
Global Equities Decline
Global equities declined this week. The Dow Jones and S&P 500 decreased 0.63% and 0.50%, respectively, while the Nasdaq lost 0.52%. The US 10-year Treasury note rose slightly over the week to 4.60%. Meanwhile, the price of a barrel of West Texas Intermediate crude oil jumped more than 6% over the week to close Friday at $74.07. Volatility, as measured by the CBOE Volatility Index, ended the week at 16.13.
Mixed Global Manufacturing Data
In December, manufacturing activity showed mixed results globally. The US purchasing managers’ index saw an increase, while China experienced a slight decline. Japan’s activity improved, but the eurozone remained mostly unchanged. The United Kingdom’s activity fell to its lowest in a year. China’s services sector saw significant growth, boosting the composite index. The ISM manufacturing index in the US also rose, driven by new orders.
International Developments
South Korean Political Crisis Deepens as Arrest Attempt on President Yoon Stalls
South Korean investigators have suspended an arrest attempt on impeached President Yoon Suk Yeol after a dramatic standoff involving 80 police and investigators blocked by 200 security personnel and soldiers near his Seoul residence. Yoon, impeached after declaring martial law in December, faces charges including insurrection, punishable by life imprisonment or death, while his supporters rallied nearby, accusing authorities of treason and chanting “Stop the steal.” The Corruption Investigation Office (CIO) criticized the defiance of law enforcement and urged acting President Choi Sang-mok to enforce compliance, as Yoon’s arrest warrant remains valid until January 6th. The political turmoil extends to a Constitutional Court trial starting January 14 to decide Yoon’s fate, amidst allegations of military abuse of power and a fractured government in disarray.
Russian Gas Transit to EU via Ukraine Stops, Slovak PM Meets with Putin
Russian gas exports to the European Union (EU) through Ukraine ceased on January 1st after a five-year transit deal expired, marking a strategic shift that ends a supply route active since 1991. While EU reliance on Russian gas has dropped to under 10% compared to 40% in 2021, eastern nations like Slovakia and Moldova face significant challenges, with Slovakia warning of “drastic” consequences and Moldova declaring a state of emergency. Ukrainian President Zelensky denounced Russia’s continued energy influence as “blackmail,” while EU nations turned to alternative suppliers like Qatar, the US, and Norway to mitigate disruption. The situation has heightened regional tensions, with Slovakia’s potential electricity cut to Ukraine drawing criticism and Poland offering support to Kyiv. Meanwhile, on December 23rd, Slovak Prime Minister Robert Fico met Russian President Vladimir Putin in Moscow to discuss gas supplies, despite Ukraine’s refusal to renew a transit deal set to expire and EU sanctions since Russia’s 2022 invasion of Ukraine, drawing criticism from EU leaders and Slovak opposition for breaking EU unity, while Fico defended the visit as ensuring affordable energy for Slovakia.
Pakistan Intensifies Cross-Border Strikes Amid Rising Tensions
On December 24th, Pakistani airstrikes in Afghanistan targeted Tehreek-e-Taliban Pakistan (TTP) hideouts, killing several militants days after 16 Pakistani soldiers were ambushed and killed near the border. Afghanistan’s Taliban regime condemned the strikes, claiming dozens of civilian casualties, while retaliatory attacks escalated cross-border violence. Pakistan accuses the Taliban of sheltering the TTP, which carried out 444 terrorist attacks in 2024, leading to 1,612 fatalities—the deadliest year in a decade. Efforts to address tensions include talks with Taliban officials and the resettlement of TTP militants, but both sides face domestic pressure, leaving border civilians caught in escalating violence.
US Social & Political Developments
Biden Blocks $14.1 Billion US Steel-Nippon Steel Deal Following CFIUS Review
On January 3rd, President Joe Biden blocked the $14.1 billion acquisition of US Steel by Japan’s Nippon Steel, citing national security concerns following a year-long review by the Committee on Foreign Investment in the U.S. (CFIUS). US Steel, the nation’s third-largest steelmaker, faced potential plant closures without the deal, but the United Steelworkers union’s opposition influenced the decision, aligning with Biden’s pro-union and protectionist stance. Nippon Steel had promised $1 billion in upgrades to US Steel’s Mon Valley Works and Gary, Indiana plants, but the company is now liable for a $565 million breakup fee. Despite Japan’s status as a close US ally, the decision reflects bipartisan resistance to foreign ownership of critical industries during an election year.
Terrorist Attack in New Orleans Leaves At Least 14 Dead, Dozens Injured
In the early hours of January 1st, Shamsud-Din Jabbar, a 42-year-old US citizen and veteran, drove a rented truck into a crowded Bourbon Street in New Orleans, killing at least 14 people, including himself, and injuring over 35 others. The attack, labeled an act of terrorism by the FBI, involved two improvised explosive devices and weapons, with Jabbar reportedly inspired by ISIS. New Orleans Police Superintendent Anne Kirkpatrick noted that barriers and officers were bypassed, with Jabbar firing on police before being fatally shot. President Biden condemned the attack, directed federal resources to aid the investigation, and postponed the Sugar Bowl game, initially scheduled for January 1st.
Corporate/Sector News
Tesla Faces Challenges as BYD Closes the Gap in Global EV Market
In 2024, Tesla’s sales dropped for the first time in over a decade, delivering 1.79 million cars, a 1% decline from 2023, while China’s BYD surged with 1.76 million EVs sold, part of its 4.2 million total vehicle sales—a 41% year-on-year increase, driven largely by hybrids. BYD capitalized on strong domestic demand in China, aided by government subsidies and price competition, further outpacing foreign rivals like Volkswagen and Toyota. Tesla struggled with slowing EV demand in key markets, price wars, and rising borrowing costs.
TikTok Faces Looming US Ban Amid National Security Concerns
TikTok, owned by China’s ByteDance, faces a US ban on January 19th unless sold, following a 2024 law signed by President Joe Biden citing national security risks over the app’s data access for 170 million US users. President-elect Donald Trump, taking office on January 20th, has urged the Supreme Court to delay the ban, with arguments set for January 10th, and hinted at resolving the issue politically. ByteDance has challenged the law as unconstitutional, warning of severe impacts on free speech, while the US government and companies like Apple and Google prepare for app store removals if the ban proceeds. Globally, TikTok faces bans in India and restrictions in Europe, while Trump’s December meeting with TikTok CEO Shou Zi Chew raised speculation about a potential compromise.
Honda-Nissan $50 Billion Merger Eyes Survival Amid Competition from BYD and Tesla
Honda and Nissan announced discussions for a $50 billion merger to tackle the costly shift toward electric vehicles and advanced software, aiming for completion by August 2026 under a holding company listed in Tokyo. The merger would create the world’s third-largest automaker, combining Honda’s nearly 4 million annual vehicle sales with Nissan’s 3 million, and employ 325,000 people. Amid growing global competition from Tesla and BYD, the partnership seeks to cut R&D costs, enhance operational efficiency, and accelerate innovation while addressing financial challenges like Nissan’s 90% profit drop this fiscal year. The consolidation reflects a broader $10 billion M&A surge in Japan’s auto sector in 2024, as legacy automakers race to stay relevant in a rapidly evolving market.
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