Weekly Market Update

Author : Rachel Poole
Date : November 6, 2021

Global Market News

Global equities make gains
Global equities had another week of gains, establishing new highs after the Federal Reserve announced that it would reduce the pace of its bond-buying program. The S&P 500 and Dow Jones gained 2.00% and 1.42%, respectively, while the Nasdaq closed the week up 3.05%. The yield on the US 10-year Treasury dropped down to 1.45%, and the price of a barrel of West Texas Intermediate crude oil decreased to $81.36. Volatility, as measured by the CBOE Volatility Index, ended the week at 16.4.

Fed unveils plans to taper bond purchases
Markets picked up after the Federal Reserve unveiled a plan to taper its pandemic-era bond purchasing program. At the central bank’s meeting on Wednesday, the Federal Open Market Committee (FOMC) decided to keep interest rates near zero and begin reducing the pace of asset purchases, saying such policy actions will “continue to provide strong support to the economic recovery.” The Fed will cut its monthly Treasury purchases by $10B and mortgage-backed securities by $5B, bringing the program to an end in mid-2022.

Updated Market Figures

Coronavirus Updates

Covid-19 by the numbers
Global Confirmed Covid-19 cases: 249,000,000 Global Covid-19 deaths: 5,030,000
US Confirmed Covid-19 cases: 46,300,000 US Covid-19 deaths: 752,000
*As of Friday evening

CDC recommends Covid-19 vaccine for children ages 5-11
The CDC and FDA have approved a low dose of Pfizer-BioNTech’s Covid-19 vaccine for children ages 5-11. Pfizer-BioNTech’s low dose formulation of its vaccine was found to be safe and nearly 91% effective at preventing Covid-19. The recommendation paves the way for nearly 28 million children in the US to receive vaccinations. Now, anyone the age of 5 or over is eligible for a Covid-19 vaccine. Meanwhile, rising cases in Europe have sparked fears of another Covid-19 wave and have made the region the new epicenter of the pandemic.

International Developments

Countries pledge climate action as COP26 continues
As reported in our latest monthly newsletter, The Crossroads, the United Nations Climate Conference (COP26) kicked off last weekend in Glasgow with several pledges from national leaders. In the last couple of days, additional climate action pledges have been made, including a commitment from more than 20 financial institutions and countries to end financing by next year for oil and gas projects abroad that are unabated or do not capture their carbon emissions. Also this week, more than 40 countries pledged to end or phase out new investments in coal-fired power plants, though China, India, and the US – the world’s top coal consumers – did not sign the pledge. Thousands of young climate activists, led by Greta Thunberg, marched through Glasgow yesterday calling for drastic action from global leaders to combat climate change.

Rebels in Ethiopia form an opposition alliance against Prime Minister Ahmed
Yesterday, Ethiopia’s Tigray forces joined with several other armed opposition groups to create a formal alliance against Prime Minister Abiy Ahmed’s government. At a news conference in Washington, DC, the new alliance, called the United Front of Ethiopian Federalist and Confederalist Forces, said it planned to topple Abiy’s government by negotiations or by force. The group has formed as US special envoy Jeffrey Feltman is in Ethiopia’s capital meeting with senior government officials amid calls for an immediate ceasefire. The US Embassy in Ethiopia is urging its citizens to leave as soon as possible.

US Social & Political Developments

Biden urges House to pass social spending and infrastructure bills
Friday morning, President Biden called on House Democrats to support his reduced $1.85 trillion social spending bill, dubbed the “Build Back Better” plan, and a $1 trillion infrastructure package. Progress on both bills has stalled in recent months primarily due to tense in-party negotiations among Democrats. House leaders were poised to vote on both bills Friday afternoon.

Biden administration details private sector vaccine mandate
On Thursday, the Biden administration rolled out two major rules as part of a vaccine mandate for private sector companies. First, the Occupational Safety and Health Administration issued a rule that companies with 100 or more employees must ensure that their employees are either fully vaccinated against COVID-19 by Jan. 4 or that they test negative for COVID-19 on a weekly basis. A second rule issued by the Centers for Medicare & Medicaid Services requires health care workers to be vaccinated by the same deadline, but it does not include an option for weekly testing in lieu of vaccination. The new rules, which have received backlash from several Republican-led states, cover more than 100 million American workers.

Corporate/Sector News

OPEC+ moves forward with oil production plan despite pressure
At its latest meeting, OPEC and its oil-producing allies have decided to continue with their current output plan, deciding against increasing production to counter rising oil prices. The group will rollover its August program to gradually release an increase of 400,000 barrels per day each month and expects to continue the outlined plan until the end of 2022. As oil prices have hit their highest levels since 2014, OPEC+ has fallen under increased pressure to pump more oil into the markets to ease the stress. President Joe Biden has blamed OPEC+’s reluctance for the sharp rise in energy prices in the US.

Labor shortages cause travel disruptions ahead of holiday season
Travel disruptions abounded last weekend as major airlines were forced to cancel thousands of flights due to labor shortages compounded by adverse weather. American Airlines cancelled 1,900 flights last weekend alone, while other airlines like Spirit and Southwest reported tens of millions of dollars in losses due to cancelled flights over the last couple of months. While airlines were banned from laying off workers during the pandemic as a condition for billions in pandemic relief funds, airlines were able to convince thousands of employees to take leaves of absence or retire early. Now, airline companies are struggling to hire enough employees to meet skyrocketing travel demand, sparking fears of more disruptions this holiday season.

Coca-Cola buys out BodyArmor for $5.6 million
This week, Coca-Cola acquired sports drink maker BodyArmor in a $5.6 billion deal. The deal marks Coca-Cola’s largest acquisition in history. Coca-Cola first took control of 15% of BodyArmor back in 2018 and has now taken full control of the company. Acquiring BodyArmor was a major step for Coca-Cola as it seeks to challenge energy drink leader, Pepsi.

This week from BlackSummit

Crossroads – Rachel Poole
Geopolitical Challenges and Statecraft – Rachel Poole & Tyler Thompson

Image of the Week

Video of the Week

Supply chain and recruitment pressures force restaurants to innovate
Source: Financial Times