Weekly Market Update

Author : Rachel Poole
Date : June 5, 2021

Global Market News

Global equities make slight gains
Global equities made slight gains this week. The S&P 500 and Dow Jones ended the week up 0.61% and 0.66%, respectively, while the Nasdaq gained 0.48%. The yield on the US 10-year Treasury dropped to 1.56% and the price of a barrel of West Texas Intermediate crude oil jumped nearly 5% to $69.45 following OPEC’s decision to increase production. Volatility, as measured by the CBOE Volatility Index, decreased nearly 9% on the week, falling to 16.4.

States end supplemental unemployment benefits
Half of US states have announced plans to end the supplemental unemployment benefits that began in response to the pandemic. The program, which pays a $300 weekly unemployment supplement, is set to expire on September 6^th but several states are ending the benefits as early as June 12^th. The move comes as employment rebounds. For the first time since the onset of the pandemic, initial jobless claims fell below 400,000 and the number of jobs created in May increased 559,000.

Updated Market Figures

Coronavirus Updates

Covid-19 by the numbers
Global Confirmed Covid-19 cases: 172,000,000 Global Covid-19 deaths: 3,700,000
US Confirmed Covid-19 cases: 33,300,000 US Covid-19 deaths: 596,000
*As of Friday evening

EU launches digital Covid-19 passport

The European Union (EU) has launched a digital Covid-19 passport which will allow the free movement of travelers within the bloc who have been fully vaccinated, recovered from the virus, or tested negative in the last 72 hours. According to the European Commission, seven EU countries have already begun accepting the digital certificates and the rest of the bloc will use the system by July 1^st. A few weeks ago, the EU announced it is reopening its borders to vaccinated travelers this summer.

Geopolitics Spotlight

New coalition threatens to unseat Netanyahu
Israeli Prime Minister Benjamin Netanyahu’s 12-year reign may be coming to an end as a new coalition threatens to unseat him. The new coalition, which includes a diverse set of leaders, would have far-right nationalist Naftali Bennett serve as prime minister for two years followed by secular centrist Yair Lapid. For the first time in Israel’s history the government would include an independent party of Palestinian citizens of Israel and the United Arab List. Parliament will vote on the coalition in the coming days.

The digital tax battle continues
The US has threatened a 25% tariff on roughly $2 billion worth of goods from Austria, India, Italy, Spain, Turkey, and the United Kingdom if the group fails to reach a multilateral solution on digital service taxes. The US has argued that the digital taxes levied in recent years have unfairly targeted US tech firms like Google and Facebook. A growing number of countries are demanding that big tech firms pay more tax in the countries where their clients are located. After growing impatient with the slow pace of international talks to change the global tax system, many countries have begun unilaterally imposing digital service taxes.

US Social & Political Developments

White House lays out plan for global vaccine distribution
The White House has laid out its plan to distribute tens of millions of Covid-19 vaccine doses abroad. About 75% of the 80 million vaccines the US has pledged will be distributed overseas by the end of June. The rest of the vaccines will be reserved for countries that need vaccines immediately, such as if they are experiencing a surge in cases. Of the first batch of 25 million vaccines, 19 million will be sent via the COVAX initiative to countries in Africa, Asia, South and Central America while the rest will go to regional priorities and partners including Canada, Mexico, Palestinian territories, South Korea, Ukraine, and UN frontline workers, among others. Also this week, at a summit hosted by Japan, countries and donors raised $2.4 billion to strengthen the COVAX global vaccination program.

US ends “Remain in Mexico” policy
The Biden administration has officially ended the Trump-era “Remain in Mexico” policy which forced nearly 68,000 asylum seekers to wait in Mexico until their court dates in the US. The policy was created to reduce asylum backlogs, but civil rights groups have criticized the policy for forcing asylum seekers to wait in unsafe and inhumane conditions. The policy was a departure from previous immigration protocols that allowed asylum applicants to await their court hearings in the US.

Corporate/Sector News

OPEC confirms gradual production increase
OPEC and its oil-producing allies, known as OPEC+, have agreed to gradually ease production cuts now that oil prices have begun to rebound. The group will start boosting output in July, returning to 2.1 million barrels per day. As a result of the announcement, oil prices hit two-year highs on Tuesday.

Chipmakers see record-high revenues in Q1
The world’s 10 largest chip manufacturers saw their revenues surge to record highs in the first quarter of 2021 as the semiconductor shortage rages on. The combined quarterly revenue of the chipmakers rose to a record $22.75 billion according to market research firm TrendForce. Interestingly enough, about 57% of the world’s chip foundry revenues in Q1 were generated by Taiwan Semiconductor Manufacturing Corp. alone. Another record increase in revenues is expected for the second quarter as well.

Russian cyber-gang hacks world’s largest meat processing company
Last weekend, JBS, the world’s largest meat processing company, was forced to shut down some of their facilities in the US, Canada, and Australia after a Russian cyber-criminal group hacked the company. The ransomware attack forced JBS to shut down all of its beef facilities in the US, causing a meat supply scare. The plant closures from the hack could soon lead to higher consumer prices which have already been increasing due to high demand, labor shortages, and high transportation costs.

Image of the Week

Video of the Week

From Beijing to Hong Kong, China cracks down on dissent

Source: DW News