Weekly Market Update

Author : Rachel Poole
Date : May 15, 2021

Global Market News

Global equities down on the week
Global equities declined this week as inflation fears sparked a selloff. The S&P 500 and Dow Jones ended the week down 1.39% and 1.14%, respectively, while the Nasdaq closed down 2.34%. The yield on the US 10-year Treasury rose to 1.63% and the price of a barrel of West Texas Intermediate crude oil increased slightly to $65.35. Volatility, as measured by the CBOE Volatility Index, jumped as high as 28.3 on Wednesday but came back down to 18.8 at Friday’s close.

Inflation accelerates
Rising prices and a weak jobs report have fueled concerns over inflation this week, sending markets into a frenzy. Inflation accelerated at its fastest pace in more than 12 years in April. The latest price increases indicate that, if annualized, inflation could be 4.2% going forward. Meanwhile, the US only added 266,000 jobs last month which was only a quarter of what was expected. In response to inflation fears, the Federal Reserve has said it does expect prices to rise as the economy recovers from the pandemic, but it does not expect the inflation increase to last.

Updated Market Figures

Coronavirus Updates

Covid-19 by the numbers
Global Confirmed Covid-19 cases: 162,000,000 Global Covid-19 deaths: 3,350,000
US Confirmed Covid-19 cases: 32,900,000 US Covid-19 deaths: 584,000
*As of Friday evening

CDC issues new mask mandate
This week the Centers for Disease Control and Prevention (CDC) issued new guidance for persons who are vaccinated in the US. Americans who are fully vaccinated against Covid-19 no longer need to wear masks or socially distance in most settings. However, individuals are still required to follow state, local, and business regulations and must wear a mask when traveling on planes, buses, trains, etc. While the number of Covid-19 cases and deaths has fallen substantially over the last several months, vaccination rates are beginning to slow and the pandemic continues to rage in other parts of the world including Brazil and India where new variants have emerged.

Geopolitics Spotlight

Violence in Israel continues to escalate
Over the week, Israel’s military continued to carry out air and ground strikes in Gaza against Hamas and other militant groups in response to their rocket attacks as the decades-long conflict between Israel and Palestine comes to a boiling point. Despite international calls for a cease-fire, Israel is massing troops along the Hamas-controlled Gaza frontier. As the situation continues to escalate towards full-fledged war, civilians are paying the highest cost. So far, at least 119 Gazans and 8 people in Israel, including dozens of women and children, have been killed since the fighting broke out on Monday. The United Nations Security Council plans to meet on Sunday to discuss its response to the situation.

Tensions between Armenia and Azerbaijan flare up
Armenia has accused Azerbaijan of sending troops across its southern border, escalating tensions between the two countries that went to war last year over the disputed region of Nagorno-Karabakh. Azerbaijan has rejected the accusation saying the troops were taking up positions on the Azerbaijani side of the border. Armenia has formally appealed to Russia, which brokered the most recent cease-fire agreement, to hold consultations on the border dispute.

US Social & Political Developments

Biden signs executive order on cybersecurity
In wake of the ransomware attack against the Colonial Pipeline, President Joe Biden has issued an executive order aimed at improving the country’s cyber defense mechanisms. The order will require software used by the federal government to meet new cybersecurity standards, create a review board to investigate incidents, and necessitate all federal agencies to encrypt data, among other requirements.

US report slams China for religious repression
In its annual report on religious freedom, the US State Department criticized China’s repression of Uyghur Muslims, Christians, and Tibetan Buddhists. As the report was released, Secretary of State Antony Blinked told reporters, “China broadly criminalizes religious expression and continues to commit crimes against humanity and genocide against Muslim Uygurs and members of other religious and ethnic minority groups.” Blinken also announced that Chinese Communist Party official Yu Hui would be denied entry into the US for his involvement in religious suppression.

Corporate/Sector News

Cyberattack brings down America’s largest gasoline pipeline
A ransomware attack brought down service of the Colonial Pipeline, America’s largest gasoline pipeline, last weekend. The attack caused gasoline shortages across the southeastern region of the US and sent gas prices at the pump above $3 per gallon. In order to finally bring the pipeline back online Wednesday evening, Colonial paid the hackers, $5 million. The hackers have been identified as a group named DarkSide which is believed to be operating out of Russia. The White House said there is no evidence that the hack was state-sponsored.

Disney’s stock slides after earnings report
Investors weren’t impressed with Disney’s earnings report this week, causing the company’s shares to dip. While the pandemic devastated Disney’s theme parks, it has been a boon for the Disney+ streaming service. However, Disney only added 9 million new subscribers in the first quarter, missing expectations by more than 5 million. Adding to the bad news was the 29% drop in average monthly revenue per subscriber.

Banks to give credit cards to those without credit scores
JPMorgan Chase and Wells Fargo are among a group of banks that plan to issue credit cards to people with no credit scores. The effort is part of a government-supported initiative to give more people access to credit cards. 53 million adults in the US don’t have traditional credit scores, often limiting them to other costly forms of credit such as payday loans. The pilot program, which is expected to launch later this year, will use other sources of data like bank account information to assess credit risk for those who do not have credit scores.

Video of the Week

Why sustainable ETFs are on the rise
Source: Financial Times