Weekly Market Update

Author : Rachel Poole
Date : November 21, 2020

Global Market Update

Global equities make slight gains
Global equities were slightly up this week, despite the fact that Dow Jones and S&P 500 closed down 0.73% and 0.68% respectively on Friday. The 10-year US Treasury Note yield fell 7 basis points to 0.83%, and the price of a barrel of West Texas Intermediate rose about 5% to $42.15 at market close Friday. Volatility decreased slightly on the week to 23.7 from 24 a week ago.

US Treasury will allow some emergency lending programs to expire
US Treasury Secretary Steven Mnuchin informed the US Federal Reserve on Thursday that it will not renew several emergency lending programs put in place at the beginning of the pandemic. The programs, which include the Main Street Lending Program and ones that support corporate bond markets, have been little used but provided investors with a safety net. The Federal Reserve has asked the Treasury to reconsider the decision.

Updated Market Figures

Coronavirus Updates

Covid-19 by the numbers
Global Confirmed Covid-19 cases: 55,600,000 Global Covid-19 deaths: 1,340,000
US Confirmed Covid-19 cases: 11,800,000 US Covid-19 deaths: 252,000
*As of Friday evening

More positive vaccine news raises hopes
Pfizer and BioNTech have concluded phase 3 trials of their Covid-19 vaccines. Both companies reported a success rate of 95% and will be filing applications to the FDA for emergency use authorization. If all goes well, the companies could gain approval by the middle of December and begin deliveries before the end of the year. Moderna, whose vaccine also boasts a 95% success rate, is soon to follow.

Geopolitics Spotlight

Conflict in Ethiopia rages on, creating a refugee crisis
The violent conflict between the Ethiopian government and the Tigray People’s Liberation Front (TPLF) continues. Hundreds of people have been killed since fighting erupted a couple of weeks ago. The federal government said this week it will advance on Tigray’s capital. As a result of the conflict, 32,000 people have already fled into neighboring Sudan.

A difficult December is ahead for European leaders
Europe is facing a few challenges heading into December, including a looming Brexit deadline and a budget standoff. Brexit talks have been temporarily suspended after senior negotiator, Michel Barnier tested positive for Covid-19. Also this week, Hungary and Poland vetoed the European Union budget and the coronavirus package contained within it. Unanimity among EU member states is required to pass the €1.8 trillion seven-year budget.

US Social & Political Developments

Trump orders troop withdrawals from Afghanistan, Iraq
The Pentagon announced Tuesday that the US would be reducing its troop presence in the countries, with 2,500 troops remaining in both countries. The drawdowns are slated to occur by January 15th, days before President-Elect Biden takes office. The move has drawn criticism at home and abroad, as the US comprises the bulk of NATO military and logistical support in the region. Critics are concerned the decreased presence will permit the growth of terrorist cells and the self-proclaimed Islamic State.

Rise in domestic coronavirus cases prompts additional restrictions
The US has seen a sharp rise in COVID-19 cases in the past week, prompting many state governors to tighten restrictions as the death count surpassed the 250,000 mark. Schools in New York City, Denver, and Kentucky moved to fully remote teaching. California, Minnesota, Idaho, and Maryland, among others, tightened their gathering and business restrictions. Colleges and universities in New York, New Jersey, Connecticut, Delaware, Pennsylvania, Rhode Island, and Massachusetts were encouraged to provide testing for students before Thanksgiving break. Several states have renewed masking mandates as the country prepares to celebrate Thanksgiving.

Corporate/Sector News

Amazon enters the pharmacy business
Amazon is looking to expand its empire into the pharmacy business. Through Amazon Pharmacy, doctors can send prescriptions to patients or patients can request transfers from existing pharmacies. Amazon has new tools to verify the legitimacy of physicians and can offer free 2-day shipping to its Amazon Prime customers.

Ban lifted on Boeing’s 737 MAX planes
After nearly two-years of investigations, the Federal Aviation Administration has lifted the ban on Boeing’s 737 MAX planes. The plane’s previous stall prevention system was the cause of two deadly crashes in Ethiopia and Indonesia which resulted in the deaths of 346 people, leading global regulators to ground the plane and costing Boeing nearly $20 billion. Boeing will soon be resuming deliveries of the 737 MAX which was once the company’s best-selling jet.

Tesla to be included in the S&P 500 index
Tesla shares soared on Tuesday after it was announced that the company will be joining the S&P 500 Index on December 21st. The company it will replaced has not yet been named. Due to Tesla’s massive size, the S&P 500 Index Committee is considering if it should be added all at once or in two separate tranches.

Image of the Week

Video of the Week

Coronavirus: the great disruptor – Lex Megatrends
Source: Financial Times