Weekly Market Update

Author : Rachel Poole
Date : January 31, 2022

Global Market News

Global equities decline as volatility rises

Global equities recovered some losses in what was a volatile week for markets. The S&P 500 and Dow Jones closed the week up 0.77% and 1.34% respectively, while the Nasdaq barely closed positive at 0.01%. The yield on the US 10-year Treasury note closed the week at 1.78% while the price of a barrel of West Texas Intermediate crude oil climbed to its highest level since 2014, closing at $87.26. Volatility, as measured by the CBOE Volatility Index, jumped up several points earlier in the week but ended Friday at 27.6.

US economy grows at fastest rate since 1984

In the final quarter of 2021, the US economy grew at a 6.9% annual rate, its fastest rate since 1984. Growth was up significantly from the third quarter’s 2.3% growth rate. However, the spread of the Covid-19 Omicron variant is likely to slow the pace of growth in Q1 of 2022. The US economy is predicted to expand well above pre-pandemic levels in 2022, but inflation continues to run hot. On Friday, the Federal Reserve’s preferred inflation measure, the core personal consumption expenditures index, rose 4.9% year over year, marking its highest rise since September of 1983. During a press conference this week, the Fed set the stage for rate hikes likely beginning in March and announced the end of its asset purchases.

Updated Market Figures

Coronavirus Updates

Covid-19 by the numbers

Global Confirmed Covid-19 cases: 364,200,000 Global Covid-19 deaths: 5,630,000
US Confirmed Covid-19 cases: 72,373,000 US Covid-19 deaths: 869,800
*As of Friday evening

Pfizer and Moderna launch Omicron specific vaccine trials

As the Covid-19 Omicron variant continues to run rampant across the globe, Pfizer and Moderna have announced the launch of Omicron-specific vaccine trials. Each company is testing a booster dose of its Covid-19 vaccine which has been specially designed to attack the Omicron variant. Moderna said that while a third shot of its original vaccine increased the antibodies against the variant, the levels of neutralizing antibodies declined 6 months after the booster shot was administered. While Omicron has proven to be less severe than other variants, it has significantly driven up the number of infections and strained healthcare systems.

International Developments

Western allies prepare sanctions on Russia as NATO puts troops on standby

This week, the US submitted its written response to Russia’s security demands. While the response was rejected by Moscow, it continues to be committed to diplomacy and has not indicated military action. As tensions remain high, the European Union (EU), United Kingdom, and the US are drafting plans to sanction Russia’s energy sector if it invades Ukraine. Meanwhile, the EU, which buys about 40% of its natural gas from Russia, is looking elsewhere for gas supplies, speeding up negotiations with gas producers around the world. Earlier this week, the North Atlantic Treaty Organization (NATO) said its member countries were putting military forces on standby and sending extra ships and warplanes to Eastern Europe in case Russia decides to invade Ukraine.

Military coup ousts Burkina Faso’s president

On Monday in Burkina Faso, a military coup ousted President Roch Marc Christian Kabore. The next day, more than a thousand people gathered in Ouagadougou, the country’s capital, to celebrate the takeover. Demonstrators have continuously demanded Kabore’s removal as his government has failed to quell rising Islamist violence. Military leaders have dissolved the country’s legislature and closed its borders. The US, United Nations, regional bloc ECOWAS, and the G5 group of Sahel nations have all condemned the coup.

US Social & Political Developments

Supreme Court Justice Stephen Breyer announces his retirement

US Supreme Court Justice Stephen Breyer has announced his retirement after more than two decades of service. Justice Breyer is known for his practical and moderately liberal position on a conservative court and wrote many of the court’s centrist decisions. His retirement gives President Joe Biden his first opportunity to name a new justice to the court. Biden has pledged to name a Black woman the next Supreme Court Justice. Likely nominees are federal Judge Ketanji Brown Jackson and California Supreme Court Justice Leondra Kruger. The nomination is expected to come by the end of February.

Vice President Harris attends Honduran president’s inauguration

Vice President Kamala Harris attended the inauguration of Xiomara Castro, Honduras’s first female president. As Harris has been tasked with addressing the “root causes” of migration from Central America, she is seeking an ally in Castro. The US has strongly backed Castro in her campaign has pledged resources to support Honduras in its new period of democracy following the autocratic rule of Juan Orlando Hernández. Harris and Castro held a bilateral meeting following the inauguration ceremony. While visiting, Harris said the US will send Honduras several hundred thousand Covid-19 vaccine doses in the next two months and $1.35 million to refurbish educational and health facilities.

Corporate/Sector News

Apple posts highest revenue in its history

Apple’s reported its highest revenues in company history this week as it announced its fourth quarter earnings. The tech company’s sales increased 11% to $123.9 billion led by the iPhone which generated $71.6 billion in revenue in the last three months of 2021. Apple’s stock responded to the news by soaring 5% on Thursday in after-hours trading, and surging nearly 7% on Friday, despite the recent market upheaval on the technology sector.

GM to invest $6.6B in Michigan to increase EV business

General Motors is investing $6.6 billion in its home state of Michigan to bolster its presence in the electric vehicle (EV) market. The company will be investing the billions through 2024 to increase EV pickup truck production and build a new EV battery cell plant. The move is part of the company’s strategic plan to achieve its goal of increasing its US production capacity to 1 million EVs by 2025. Other luxury carmakers are following suit, with Lamborghini and Bentley making announcements this week to go fully electric.

Federal judge cancels oil and gas leases in Gulf of Mexico

On Thursday, a federal judge invalidated an oil and gas lease sale for 80 million acres in the Gulf of Mexico after environmental groups sued the Biden administration to stop the plans. According to data from the Bureau of Ocean Energy Management, the decision cancels 1.7 million acres of oil and gas leases from the sale. The ruling invalidated the lease, citing the Department of Interior’s failure to take into account the climate impact of the leases. The court found that the Biden administration used outdated modeling when assessing the climate-warming impact of the sale and is now requiring the Department of Interior to redo its environmental analysis and fix the greenhouse gas modeling in order to move forward with the new lease sale.