Weekly Market Update

Author : The BlackSummit Team
Date : March 4, 2023

Global Market News

Global equities rebound

Global equities were up on the week in an attempt to rebound from last week’s slump. The S&P 500 and Dow Jones were up 1.90% and 1.75% respectively, while the Nasdaq gained 2.58%. After reaching above 4% midweek, the yield on the US 10-year Treasury settled at 3.96%. The price of a barrel of West Texas Intermediate crude oil ticked up slightly to $79.81. Volatility, as measured by the CBOE Volatility Index, closed the week a few points down at 18.49.

Economic data points to entrenched inflation

While markets started the year off well, a slew of economic data across developed markets over the last couple of weeks has pointed to inflation becoming entrenched. Second-tier US economic data released this week, including a 3.2% rise in unit labor costs, told the same story. Meanwhile, in Europe, preliminary inflation data showed that the pace of improvement has tapered off with January’s 8.6% inflation rate only coming down to 8.5% in February. Bond yields in the US and Europe continued to rise as markets price in continued rate hikes from central banks.

Updated Market Figures

International Developments

Ruling party wins Nigeria’s presidential election

Bola Tinubu, the representative for the governing All Progressive Caucus, has won the Nigerian presidential election with about 8.7 million votes (37% of the vote). His two main rivals, Atiku Abubakar (People’s Democratic Party) and Peter Obi (Labour Party) won 6.9 and 6.1 million votes respectively. The election is the first to incorporate new changes to the voting system, such as the use of biometric data to ensure voter identity and the transmission of results electronically. In the wake of the vote, 6 Nigerian states have asked a court to void the election results, claiming that the Nigerian electoral commission failed to follow its own rules and election laws in conducting a vote and declaring a winner.

G20 summit ends without joint statement amid Ukraine controversy

The G20 summit in India ended with no joint statement due to irreconcilable differences over the issue of Ukraine. While the United States directly blamed the Russians for the impasse, the Russians accused the West of an “emotional” approach. This is the second year in a row that the G20 has failed to produce a joint statement due to disagreements over Ukraine, which must be backed unanimously by the participants. In effect, the G20 has become overshadowed by geopolitics, as Russian-US disagreements continue to boil over and US-Chinese disagreements more numerous and contentious.

US Social & Political Developments

Biden meets with German Chancellor Scholz

President Joe Biden met with German Chancellor Olaf Scholz to keep the US and Europe aligned in maintaining defensive assistance to Ukraine. The move comes amidst concerns that the public in both the US and Europe is becoming war-weary. In support of maintaining a unified front, Biden expressed gratitude to Germany over its agreement to send Leopard 2 tanks to Ukraine, a move made in parallel with the US decision to support Ukraine with Abrams tanks. Analysts believe Biden also wanted to keep Germany’s economic relationship with China in check which risks impeding the US-led effort to bring down Russia’s war machine.

New House Committee on China meets

The newly minted Special House Committee on China began its work on Tuesday amidst growing friction between the US and China. The committee chairman has expressed that the committee is important as China and the US enter into “an existential struggle over what life will look like in the 21st century.” Critics have responded in kind, saying that the committee is liable to further exacerbate US and Chinese fraying ties. The committee’s first meeting comes on the heels of the Department of Energy releasing a statement, concurring with the FBI in assessing that Covid-19 likely escaped a laboratory in Wuhan, China.

Corporate/Sector News

Tesla to build plant in Mexico

Tesla is planning to build a new assembly plant in northern Mexico, signaling the company’s push to expand its operations outside the U.S. Mexico’s president called the $5 billion deal a “considerable investment” that will create “many jobs.” According to officials, the site would produce around one million vehicles yearly for domestic and international markets. The deal also highlights the growing importance of Mexico as a hub for nearshoring – the movement of supply chains closer to North America among growing geopolitical tensions.

Chip companies face ban on expanding in China

Chip firms that receive federal funds aiming at boosting the United States semiconductor capacity will soon face restrictions on expanding their manufacturing capabilities in China and other geopolitical adversaries. The new rules apply to the $39 billion fund from the Chips and Science Act passed last year, and will ban the recipients of the fund from expanding their operations in China, North Korea, Iran, and Russia.

Railroads join federal reporting system in wake of Norfolk Southern Derailment

Norfolk Southern and other large railroad companies agreed to join a federal reporting system that lets employees confidentially report close calls. Regulators claim that similar systems have benefited the aviation industry and that the failure of the railroad industry to implement such a system has hindered safety. The disastrous derailment in East Palestine, Ohio, provided the impetus for further scrutiny of the railroad industry’s safety practices.

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Video of the Week

Will TikTok be banned?

Source: DW News