Weekly Market Update

Author : Rachel Poole
Date : March 27, 2021

Global Market News

Global equities gain slightly
Global equities were slightly up on the week. Both the S&P 500 and Dow Jones posted gains of 1.57% and 1.36% respectively, while the Nasdaq decreased 0.58% on the week. The US 10-year Treasury dropped down a few bps, closing Friday at 1.68%. The price of a barrel of West Texas Intermediate crude oil dropped again this week, closing the week at $60.97. Volatility, as measured by the CBOE volatility index, decreased from 21.3 to 19.3 on the week.

Federal Reserve drops bank restrictions
Last June, the Federal Reserve prohibited large US banks from buying back stock in order to conserve capital as the pandemic plagued the nation’s economy. Now, following a round of stress tests, the Federal Reserve Board will end the restrictions on most banks paying dividends and buying back shares after June 30th. Banks with capital levels above the stress test will no longer have to face the restrictions while those who remain below will be subject to limitations. The move will provide more clarity for investors and to the financial sector.

Updated Market Figures

Coronavirus Updates

Covid-19 by the numbers
Global Confirmed Covid-19 cases: 126,000,000 Global Covid-19 deaths: 2,760,000
US Confirmed Covid-19 cases: 30,200,000 US Covid-19 deaths: 548,000
*As of Friday evening

India suspends vaccine exports as cases rise

As the number of Covid-19 cases surges in India, the government has temporarily suspended all major exports of the AstraZeneca vaccine made by the Serum Institute of India (SII). The move was made to meet domestic demand for the vaccine as cases rise, but it will likely hurt the COVAX vaccine-sharing initiative backed by the World Health Organization. So far, SII has provided COVAX with 17.7 million doses of the AstraZeneca vaccine. COVAX has made a deal with SII to buy 1.1 billion doses of the vaccine for low and middle income countries, but exports will not continue until India’s situation stabilizes.

Geopolitics Spotlight

Eritrea to withdraw troops from Tigray region
Just days after the Ethiopian government admitted Eritrean troops were fighting on its behalf in the Tigray region of Ethiopia, Prime Minister Abiy Ahmed said Eritrea will pull its troops out. The conflict in the Tigray region between Ethiopian federal forces and the Tigray People’s Liberation Front first broke out in November. Since then, thousands of people have been killed and hundreds of thousands of Ethiopians have been displaced. The Ethiopian Human Rights Commission and the United Nation’s human rights office will be conducting a joint investigation into the claims of human rights abuses, including claims of ethnic cleansing, in the region.

Israel remains in political deadlock
Final results from Israel’s parliamentary elections this week show that Israel is in a political deadlock yet again. Prime Minister Benjamin Netanyahu’s Likud party has fallen short of a governing majority, raising the possibility of a fifth election. Though he is a popular prime minister, he is struggling to stay in power while also under indictment for corruption. While the Likud party received enough votes to be the largest party in parliament, it will have to gain the support of opposition parties to form a coalition government. Israel has been without a functioning government for more than two years now, making it the country’s worst political crisis in decades.

US Social and Political Developments

Biden delivers first presidential news conference

President Joe Biden delivered his first news conference as President on Thursday night, addressing several national issues including Covid-19, infrastructure, immigration, and Afghanistan. Some highlights from the news conference include President Biden doubling the Covid-19 vaccination goal for his first 100 days in office, emphasizing his plans for a massive infrastructure spending package, and announcing that US troops would not be pulling out of Afghanistan by May 1^st, as previously planned according to a US-Taliban agreement.

Democrats call for gun reform in wake of mass shootings
In wake of two recent mass shootings in the US, President Biden is urging the Senate to pass gun reform legislation. On Monday, ten people were killed by a shooter in a Colorado grocery store. Less than a week before, a gunman shot and killed eight people in the Atlanta area. The Biden administration and Democrats are calling for Congress to ban assault weapons and close background-check loopholes.

Corporate/Sector News

Massive container ship blocks Suez Canal
After losing its ability to steer amid bad weather, a massive container ship has become stuck in the Suez Canal, blocking all traffic from passing through the canal. Tugboats and dredgers are working tirelessly to dislodge the ship, but after multiple days of efforts, little progress has been made. Officials hope the high tide this weekend will provide the opportunity to dislodge the vessel, finally allowing navigation through the canal to proceed. If it takes more than a couple of days to free the ship, shipping firms will be forced to re-route ships around the Southern tip of Africa which adds nearly a week to the journey. A rough estimate by Lloyd’s List says the blockage is halting $9.6 billion a day in ship traffic. Crude oil prices have gone up as a result as worries grow over oil shipments.

Railroad merger creates transcontinental rail network for North America
Canadian Pacific Railway has agreed to buy Kansas City Southern for $25 billion in cash and stock. The deal creates the first transcontinental rail network in North America, linking the US, Canada, and Mexico. The buyout will ultimately enable more efficient integration of the continent’s supply chains and create jobs across the continent.

Intel expands chip manufacturing
Intel is planning a major manufacturing expansion in light of the global semiconductor shortage. The company will start with a $20 billion investment in two new chip factories which will be located on the Ocotillo campus in Arizona. Intel also announced it will be a manufacturing partner for chip companies that design semiconductors but don’t make the chips themselves.

Image of the Week

Suez Canal: Critical Waterway Comes to a Halt

Video of the Week

Video: Suez Canal Blocked by Giant Container Ship

Source: Wall Street Journal