Weekly Market Update

Author : Rachel Poole
Date : October 23, 2021

Global Market News

Global equities make gains
Global equities made gains after a week of positive third-quarter earnings results. The S&P 500 and Dow Jones gained 1.64% and 1.08%, respectively, while the Nasdaq closed the week up 1.29%. Meanwhile, the yield on the US 10-year Treasury continued moving up to 1.64%, as did the price of a barrel of West Texas Intermediate crude oil which closed Friday at $84.17. Volatility, as measured by the CBOE Volatility Index, ended the week at 15.4.

China’s growth slows
Economic data released this week reveals a slowdown in China’s growth. China’s third-quarter GDP missed expectations of a 5.2% expansion, as the pace of industrial activity slowed. At the end of September, many factories had to halt production as authorities mandated shutdowns due to shortages of electricity and a surge in the price of coal. Because of new waves of Covid-19 infections, supply chain disruptions, and inflation pressures, the International Monetary Fund (IMF) has cut growth expectations for the Asian region as a whole. Down 1.1% from its estimate in April, the IMF has revised its growth forecast to 6.5% and has warned of an unbalanced recovery in the region as the gap between advanced economies, emerging markets, and developing countries is deepening.

Updated Market Figures

Coronavirus Updates

Covid-19 by the numbers
Global Confirmed Covid-19 cases: 243,745,000 Global Covid-19 deaths: 4,953,000
US Confirmed Covid-19 cases: 46,264,000 US Covid-19 deaths: 755,000
*As of Friday evening

FDA authorizes “mix and match” vaccines
This week the FDA authorized Modern and Johnson & Johnson Covid-19 booster shots for the same population as the Pfizer-BioNTech booster: 65 years and older and below the age of 65 if at high risk of severe disease or due to frequent institutional or occupational exposure. With these two new authorizations, every Covid-19 vaccine approved in the U.S. now also has a booster. The FDA has also authorized “mix and match” vaccines, allowing booster doses to be administered which are different from the ones received during the original vaccination series.

International Developments

Polish rule of law dispute to dominate EU Summit
The European Union’s summit, held Thursday and Friday, was originally slated to focus on issues including rising energy prices and a green pandemic recovery, but a dispute over rule of law topped the agenda. Earlier this month, Poland’s top court ruled that domestic law trumps EU law. This week, the president of the European Commission and Poland’s prime minister clashed over the issue in the European Parliament this week, escalating tensions. At the EU summit, European leaders warned Poland that they were prepared to deploy further legal sanctions against Warsaw in response to its defiance of EU law.

Russia suspends diplomatic ties with NATO
In the latest sign of unraveling tensions between Russia and the West, Russia suspended diplomatic ties with the North Atlantic Treaty Organization (NATO). The move comes just a couple of weeks after NATO reduced the size of the Russian representative office and ordered eight Russian diplomats to leave Belgium by November 1st, saying they were undeclared intelligence officers. Now, Russian Foreign Minister Sergey Lavrov has said the entire diplomatic mission will leave by November 1st. In response NATO declared, “NATO’s policy toward Russia remains consistent. We have strengthened our deterrence and defense in response to Russia’s aggressive actions, while at the same time we remain open to dialogue.”

US Social & Political Developments

Biden provides insights on economic agenda at town hall
US President Joe Biden provided some insights into recent negotiations over his economic agenda at a town hall meeting hosted by CNN Thursday night. President Biden’s $2-3 trillion budget proposal has stalled in the Senate due to objections from West Virginia’s Joe Manchin and Arizona’s Kyrsten Sinema who have expressed concerns about heavy spending for expanding the social safety net and combating climate change. At the town hall meeting, President Biden said it is unlikely that corporate tax rate hikes will be incorporated in the plan and discussed other elements of the original plan, like parental leave and child tax cuts, had been cut or changed. President Biden has expressed the desire to get a framework agreement in place so the House could vote on a bipartisan infrastructure bill before the UN Climate Conference in Glasgow.

Blinken visits Colombia, Ecuador
US Secretary of State Antony Blinked visited Ecuador and Colombia this week, demonstrating greater foreign policy commitment to the region. While on his three-day trip, Blinken discussed migration issues, challenges to democracy in the region, and pandemic recovery efforts. During a speech, Blinken said the Americas were undergoing a “democratic reckoning” and voiced the US’ desire to be an ally in showing that democracies can deliver social well-being. The US also pledged millions of dollars in aid and millions of vaccine doses to support the Ecuador and Colombia’s Covid-19 response.

Corporate/Sector News

PayPal looks to buy Pinterest
PayPal reportedly offered $45 billion to buy Pinterest. Talks are at an early stage, but if a deal goes through, the acquisition would be the largest of a social media company. The potential combination may seem a bit odd at first glance, but Pinterest could be a positive for PayPal’s ongoing monetization initiatives, especially if it were to be integrated with PayPal’s other social commerce platforms.

Bitcoin hits all-time highs, Bitcoin ETF launches on NYSE
Bitcoin topped $66,000 this week, hitting an all-time record. The cryptocurrency was pushed higher after the launch of ProShares Bitcoin Strategy ETF (BITO) on the New York Stock Exchange on Tuesday. The exchange-traded fund is the first of its kind approved by the U.S. Securities and Exchange Commission to invest in bitcoin futures. Yesterday, a second bitcoin ETF, Valkyrie Bitcoin Strategy ETF, was launched on Friday.

China’s Evergrande makes interest payment
Indebted, Chinese property developer Evergrande made a $83.5 million interest payment just days before the end of its 30-day grace period, allowing the company to avoid default…for now. The company still owes $573 million on four other notes this year and faces $7.7B in bond maturities in 2022. Evergrande’s Hong Kong-listed stock has dropped more than 80% as the drama has roiled markets due to fears of spillover effects into the rest of the Chinese economy.

This week from BlackSummit

Contemplating Technological Evolutions – Nicolas Abdelhak, Mohamed Ramzi, John Charalambakis
Geopolitical Challenges and Statecraft – Rachel Poole and Tyler Thompson

Video of the Week

IPCC’s Physical Science Basis for Climate Change
Source: DW News