Weekly Market Update

Author : Rachel Poole
Date : May 29, 2021

Global Market News

Global equities rally
Global equities rallied this week as worries that the US economy was overheating calmed. The S&P 500 and Dow Jones ended the week up 1.16% and 0.94%, respectively, while the Nasdaq rose 2.06%. The yield on the US 10-year Treasury dropped to 1.59% and the price of a barrel of West Texas Intermediate crude oil increased several dollars to $66.65, ending the week nearly 5% up. Volatility, as measured by the CBOE Volatility Index, decreased several points, landing at 16.7 Friday afternoon.

US Department of Commerce releases mixed data
On Friday, the US Department of Commerce reported that the core personal consumption expenditures (PCE) index, a key indicator of inflation, rose 3.1% year over year. While this is higher than the Federal Reserve’s goal of a PCE lower than 2.0%, Fed officials maintain the belief that the recent surge in inflation is temporary. The Commerce Department also reported that personal income fell 13.7% after surging in March due to stimulus payments and that the savings rate remained high at 14.9% while consumer spending rose slightly.

Updated Market Figures

Coronavirus Updates

Covid-19 by the numbers
Global Confirmed Covid-19 cases: 169,000,000 Global Covid-19 deaths: 3,510,000
US Confirmed Covid-19 cases: 33,200,000 US Covid-19 deaths: 593,000
*As of Friday evening

50% of American adults are vaccinated, EU to send 100 million doses abroad

According to recent data from the CDC, 50% of adults in the US are now fully vaccinated. Among people 65 years and older, about 74% have been fully vaccinated and more than 5 million adolescents have received at least one dose now that the Pfizer-BioNTech jab is approved for anyone over the age of 12. In other vaccine news, the European Union (EU) has pledged to send at least 100 million vaccines to low- and middle-income countries this year and invest $1 billion to aid vaccine manufacturing in Africa.

Geopolitics Spotlight

EU sanctions Belarus for “hijacking” plane
The EU has agreed to ramp up sanctions against Belarus after Belarusian President Alexander Lukashenko ordered a commercial plane to land in Minsk where, shortly thereafter, a dissident journalist who was a passenger on the plane, Roman Protasevich, was arrested. President Ursula von der Leyen called the incident a “hijacking.” So far, the EU has banned Belarus’s state airline from using the bloc’s airspace and airports and has imposed economic sanctions. Also this week, President Lukashenko signed a series of laws to give authorities power to suspend telecom networks and block media outlets, among other efforts to crack down on dissent. US President Joe Biden has hinted that the US is also considering sanctions against Belarus for the incident.

Beijing and Moscow hold security talks
China’s top diplomat, Yang Jiechi, visited Moscow for three days to discuss security and strategic affairs between China and Russia. Russian President Vladimir Putin said relations between the two countries are “the best in history”, reaffirming his commitment to a strong relationship with China. Just days before the security meeting, both President Putin and Chinese leader Xi Jinping attended the video-link launch of a nuclear energy project between the two countries which entails Russia helping China build four nuclear reactors.

US Social & Political Developments

Biden announces $6 trillion budget
Yesterday, President Biden unveiled his $6 trillion budget proposal. The major highlights of his plan are increases in spending for infrastructure, public health, and education, and tax hikes for corporations and the wealthy. The package is driven by two key initiatives the Biden administration has been working to launch, the American Jobs Plan and the American Families Plan, which are expected to total $4.5 trillion together. The massive budget will bring the country to its highest sustained levels of federal government spending since World War II.

Blinken visits Middle East to shore up Gaza truce
US Secretary of State Antony Blinken began a Mideast tour this week with the purpose of bolstering the ceasefire between Israel and the Palestinian group Hamas brokered by Egypt. While on his trip, Blinken said the US would seek to reopen a consulate for Palestinian affairs in Jerusalem and offer $360 million in aid to Gaza that would not directly benefit Hamas. He also met with Egyptian President Abdel Fatah al-Sisi to affirm the US’s support in coordinating an end to the conflict.

Corporate/Sector News

Major oil companies suffer big blow
As climate concerns put pressure on corporations to go green, the world’s major oil producers are suffering. Notably, Exxon Mobil’s shareholders elected two new members who are calling for the company to become carbon neutral by 2050. On the same day, Chevron passed a corporate resolution that will force the company to cut greenhouse gas emissions and a Dutch court ruled that Shell must cut its emissions by 45% by 2030.

New budget airline carriers debut as travel rebounds
Avelo Airlines and Breeze Airways are making their debut as travel stages a comeback this Memorial Day weekend. These two new US budget carriers will help supply the travel demand as 2.5 million people are expected to travel by air this weekend. They may also put added pressure on larger carriers like JetBlue, Southwest, American, and Delta which have struggled due to the pandemic. Up 60% from last year, a total of 37 million Americans are planning to travel from Thursday to Monday.

Amazon acquires MGM
Amazon has reached a deal to acquire MGM for $8.45 billion. The purchase, which is the second largest in the company’s history, will give Amazon a library of more than 4,000 films, including franchises like James Bond and Rocky. The MGM acquisition will also give Amazon opportunities to expand advertising, which is one of its fastest-growing businesses, and boost its position in the streaming industry.

Image of the Week

Video of the Week

Belarus: Attack on press freedom intensifies
Source: DW news