Weekly Market Update

Author : Rachel Poole
Date : May 22, 2021

Global Market News

Global equities have another rough week
After a rough start the week, global equities regained some momentum but still fell short on the week. The S&P 500 and Dow Jones ended the week down 0.42% and 0.51%, respectively, while the Nasdaq barely edged up 0.31%. The yield on the US 10-year Treasury dropped slightly to 1.62% and the price of a barrel of West Texas Intermediate crude oil decreased more than 2% to $63.81. Volatility, as measured by the CBOE Volatility Index, closed Friday at 20.2.

UK economy show signs of bouncing back
After slumping nearly 10% in 2020, the United Kingdom’s (UK) economy is showing signs of bouncing back. As nonessential businesses reopened, sales in the UK increased by 9.2% which was double economist’s expectations. Data released this week shows the composite purchasing managers’ index surged to 62 in May. In addition, factory orders increased at a record pace in May and business confidence reached an all-time high according to the Confederation of British Industry.

Updated Market Figures

Coronavirus Updates

Covid-19 by the numbers
Global Confirmed Covid-19 cases: 166,000,000 Global Covid-19 deaths: 3,430,000
US Confirmed Covid-19 cases: 33,100,000 US Covid-19 deaths: 588,000
*As of Friday evening

India sets Covid-19 death record while other regions reopen

India set a new record for single-day Covid-19 deaths this week after reporting more than 4,500 in a 24-hour period. Fortunately, the pandemic’s surge in India is showing signs of slowing as daily case counts have begun to fall. Because the country has been so overwhelmed by the virus, it is unlikely to resume vaccine exports until October. Meanwhile, the European Union (EU) has agreed to open its borders to vaccinated travelers and many US states are beginning to lift mask mandates.

Geopolitics Spotlight

Hamas and Israel agree to cease-fire
Israel and Hamas, the Palestinian militant group, have agreed to a cease-fire after 11 days of fighting. More than 200 people have been killed and thousands displaced since the violence erupted. The details of the agreement are unclear, but Israeli Prime Minister Benjamin Netanyahu has claimed “victory”, saying the Israeli military destroyed Hamas’s infrastructure, but Hamas leaders have also claimed to have won. Many world leaders and institutions, such as the United Nations, have welcomed the cease-fire and are urging the two sides to begin peace talks.

Europe freezes China investment deal
The European Parliament has overwhelmingly voted to halt the ratification process of a “landmark” investment deal with China. The move comes just weeks after China imposed penalties on several members of the European Parliament in retaliation for sanctions placed on four Chinese officials for the repression of Uyghurs in China’s Xinjiang region. While the vote does not mark the end of the deal, China must lift the sanctions before the EU would allow it to move towards ratification.

US Social & Political Developments

Treasury aims to close the “tax gap”
The US Treasury announced plans to close the “tax gap” in order to raise $700 billion in additional revenue as the Biden administration looks for ways to fund its spending plans. The effort to close the “tax gap”, the difference between taxes owed and taxes paid, will include an additional $80 billion in funding for the Internal Revenue Service (IRS), allowing the department to hire 5,000 more employees.

The House passes Asian American hate crimes bill
The House of Representatives overwhelmingly voted to pass legislation this week to address Asian American hate crimes amid an uptick in discrimination and violence against Asian-Americans during the pandemic. The bill, if signed off by President Biden, would establish a new position at the Justice Department to expedite the review of hate crimes, encourage the creation of hate crime hotlines, and provide grants to law enforcement agencies to develop training programs and education campaigns.

Corporate/Sector News

AT&T and Discovery to merge media businesses
AT&T has agreed to combine its media business, WarnerMedia, with rival Discovery in a multi-billion-dollar deal. If successful, the deal would create the second-largest media company in the world by revenue, falling just behind Disney. The new combined company, expected to have an enterprise value of $132 billion, would bring some major competition to the global streaming race.

Ford announces new EV truck during Biden’s visit
Ford announced its new electric F-150 Lightning model this week after first giving President Biden a sneak preview during his visit to the Ford plant in Dearborn, Michigan. The new EV truck will be able to travel 300 miles per battery charge and will price at $39,974 for the work truck version and $52,974-$90,000 for the consumer version. The company expects the F-150 Lightning to be profitable as soon as it arrives at US dealerships next year.

Cryptos crash amid caution from SEC
Cryptocurrencies, including Bitcoin, Ether, and Dogecoin, crashed this week as a variety of institutions cautioned investors about the volatile crypto scene. The Securities and Exchange Commission (SEC) said this week that “Bitcoin is a highly speculative investment” and that it would be closely monitoring whether mutual funds that invest in cryptocurrency futures comply with federal securities laws. Furthermore, Tesla decided to stop vehicle purchases with Bitcoin, JPMorgan reported that several of its institutional investors have swapped Bitcoin positions for gold, and China has cracked down on cryptocurrency transactions

Image of the Week

Video of the Week

Istanbul ship spotter captures global events moving through the Bosporus | Focus on Europe
Source: DW news