Weekly Market Update

Author : Rachel Poole
Date : June 12, 2021

Global Market News

Global equities make slight gains
Global equities made slight gains again this week. The S&P 500 closed up 0.41% while the Dow Jones lost 0.80%. Meanwhile, the Nasdaq jumped 1.85%. The yield on the US 10-year Treasury fell several basis points to 1.45% and the price of a barrel of West Texas Intermediate crude oil increased 1.68% to hit $70.79. Volatility, as measured by the CBOE Volatility Index, remained roughly unchanged on the week, closing Friday at 16.01.

Fed sticks to “transitory” stance as inflation rises
The Federal Reserve is standing by its “transitory” inflation thesis even as prices soared 5% in May. The central bank maintains that recent supply shocks and production issues are the reason for price pressures. Furthermore, it ensures rising inflation is only temporary and is also a characteristic of a rebounding economy. It could take months before it is clear if the current inflation surge is temporary, but economists predict rising costs will continue until supply chains and consumer demand realign after being somewhat distorted by the pandemic. Interestingly enough, markets did not falter after the release of inflation figures for May. In fact, the major indices opened higher, and the S&P 500 set a new record at the close.

Updated Market Figures

Coronavirus Updates

Covid-19 by the numbers
Global Confirmed Covid-19 cases: 175,000,000 Global Covid-19 deaths: 3,780,000
US Confirmed Covid-19 cases: 33,400,000 US Covid-19 deaths: 599,000
*As of Friday evening

Mastercard foundation pledges $1.3 billion to vaccination efforts in Africa, India pledges vaccines for all adults
As wealthy nations are pledging their support for the global vaccination effort, private companies are also stepping up. The Mastercard Foundation announced it will donate $1.3 billion to boost Covid-19 vaccinations in Africa. The donation will vaccinate 55 million people over the next three years. Also this week, Indian President Narendra Modi announced that the federal government will make free vaccines available to all citizens over the age of 18 by June 21^st. The decision is a critical step that is hoped to bring relief to the nation’s devastating Covid-19 outbreak.

Geopolitics Spotlight

G7 Summit kicks off
The leaders of the Group of Seven (G7) nations, joined by Australia, India, South Korea, and South Africa, began their summit yesterday in Cornwall, England. At the summit, leaders are expected to discuss various global issues, but topping the agenda is climate change, the challenges posed by China’s rise, and the global economic recovery. Prior to the summit, G7 finance ministers agreed to back a global minimum tax, raising hopes for further global economic and financial cooperation. Leaders are also expected to pledge one billion Covid-19 vaccine doses for poor and middle-income countries as part of the effort to vaccinate the world by the end of 2022.

Pedro Castillo wins Peru’s election but opponent alleges fraud
Pedro Castillo, the left wing-candidate, has won the official count in Peru’s presidential election. Castillo has reportedly won 50.2% of the votes but his opponent, right-wing candidate Keiko Fujimori, received 49.8% of the votes. Though international observers have called the elections clean and fair, Fujimori has accused Castillo’s party of fraud and is calling for 200,000 votes to be declared null and another 300,000 to be investigated. If her request is upheld, she would likely be the winner of the election.

US Social & Political Developments

US lifts some sanctions on Iran
The White House has lifted sanctions on three former officials from the National Iranian Oil Company and several Iranian energy companies amid nuclear talks with Iran. As Secretary of State Antony Blinken explained, the action shows the country’s commitment to lifting sanctions if the sanctioned person/company demonstrates of a “change in status or behavior”. The removal of these sanctions also signals Washington’s willingness to ease economic pressure on Iran and participate in nuclear negotiations if Iran agrees to do its part as well. The sixth round of nuclear talks will begin in Vienna this weekend.

Biden and Johnson sign new Atlantic Charter
US President Joe Biden and UK Prime Minister Boris Johnson held a bilateral meeting ahead of the G7 summit in Cornwall. At their meeting, the two leaders signed a new Atlantic Charter which reaffirms the “special relationship” between the US and UK. The charter is modeled after the joint statement made in 1941 by Prime Minister Winston Churchill and President Franklin D. Roosevelt. The new charter outlines eight commitments to defend shared values against “old and new challenges” and lists modern-day threats such as disinformation, election interference, climate change, and global health crises.

Corporate/Sector News

Senate passes US Innovation and Competition Act
This week, the Senate passed the US Innovation and Competition Act, a bill which seeks to invest more than $250 billion in US technology and research in order to globally challenge China’s technological progress. If passed by the House of Representatives where it is likely to received bipartisan support, $190 billion would be allocated to research and innovation in the technology sector including money for cutting-edge science and artificial intelligence. $54 billion would go specifically towards production and research into semiconductors and telecom equipment and the Commerce Department will receive $10 billion in funding to designate regional technology hubs and match financial incentives offered by state and local governments to chipmakers who expand or construct new production facilities.

FDA approves new treatment for Alzheimer’s
This week the Food and Drug Administration (FDA) approved the first new treatment for Alzheimer’s in nearly two decades. The treatment, named Aduhelm, slows down the disease by breaking up plague buildup on the brain called amyloid. The news sent shares of maker Biogen up 38% and added $16.5 billion to the company’s market value.

Amazon’s Sidewalk project goes live
Amazon’s Sidewalk project went live this week. The “neighborhood network” pools local internet connections from millions of Amazon Echo speakers and Ring devices to create a mesh network that can stretch half a mile to connect hard-to-reach areas across America. The project has raised security concerns, but Amazon assures customers that Sidewalk is built with three layers of encryption and users can turn the Sidewalk capability off on their devices.

This week from BlackSummit

Crossroads: At the Intersection of Geopolitics and Geoeconomics – Rachel Poole
Geopolitical Challenges and Statecraft – Rachel Poole

Image of the Week

Video of the Week

Hungarians oppose Chinese university project
Source: DW news