Weekly Market Update

Author : Rachel Poole
Date : January 25, 2022

Global Market News

Global equities decline for third straight week

Global equities have had a rough start to the year as markets were down for a third week in a row. The S&P 500 and Dow Jones closed the week down a staggering 5.68% and 4.58%, respectively, while the Nasdaq plummeted 7.55% on the week. The yield on the US 10-year Treasury note closed the week at 1.76% while the price of a barrel of West Texas Intermediate crude oil increased yet again, ending the week at $85.14. Volatility, as measured by the CBOE Volatility Index, jumped up several points to 28.8.

China’s growth slows

New economic data out of China shows that growth has slowed to 4% in the fourth quarter of 2021 from 4.3% year over year in the third quarter. The economy has been hampered by the ongoing property market crisis and new Covid-19 outbreaks. Following the data release, the People’s Bank of China cut key interest rates, including the rate of the one-year policy loan which was lowered 10 basis points to 3.7%. The World Bank has warned that emerging economies, including China, will be vulnerable to growth slows in 2022 and 2023 as new Covid variants emerge, inflation soars, and fiscal and monetary stimulus unwinds.

Updated Market Figures

Coronavirus Updates

Covid-19 by the numbers

Global Confirmed Covid-19 cases: 347,400,000 Global Covid-19 deaths: 5,600,000
US Confirmed Covid-19 cases: 71,390,000US Covid-19 deaths: 887,600. *As of Friday evening

CDC studies show vaccines and booster shots offer strong protection against Omicron

Three new studies released by the CDC this week reveal that vaccines and booster shots offer superior protection from both the Delta and Omicron Covid-19 variants. One of the studies published yesterday found that a third dose of either Pfizer/BioNTech or the Moderna vaccine was at least 90% effective at preventing hospitalization from Covid-19 during both the Delta and Omicron periods. It has now been about two months since Omicron began its rapid spread. Nationally, the Omicron wave has yet to peak in the US, but some areas that were hit early on by this wave are seeing an ease on hospitals and a slowdown in case numbers.

International Developments

US predicts Putin will likely “move in” on Ukraine

In a statement on Thursday, US President Joe Biden said he believes Russian President Vladimir Putin will likely “move in” on Ukraine. The last several days of negotiations with Russia have proven unfruitful. While Russian Foreign Minister Sergei Lavrov told reporters Russia has “no plans” to attack Ukraine, US and Ukrainian intelligence says Russia is increasing its arms shipments to separatist-controlled areas of eastern Ukraine. The US has made it clear that any kind of Russian invasion of Ukraine would be met with a swift and severe economic response from the US and its allies.

Yemen’s war escalates

Yemen’s war has dangerously escalated this week after multiple air strikes. Yesterday, at least 70 people were killed in a Saudi-led coalition air raid on a prison in Yemen’s northern city of Saada. On Tuesday, at least twelve people were killed in air raids launched in the Yemeni capital, Sanaa. The moves come just a day after Houthi rebels claimed responsibility for an air strike on Abu Dhabi, the capital of the United Arab Emirates (UAE). Over the last week, the Saudi-led military coalition, which backs Yemen’s government, has intensified air raids on what it claims to be military targets connected to the Houthi rebel movement. Tensions reached new highs earlier this month when militias backed by the UAE launched an offensive against the Houthis in Marib Governorate and when Houthis seized a UAE-flagged ship carrying weapons. An estimated 100,000 people have been killed in the war since in broke out in 2014 and estimated 4 million people have been displaced by the conflict.

US Social & Political Developments

Voting rights legislation shut down in Senate

President Biden’s attempt to change filibuster rules to pass voting rights reform legislation failed in the Senate in a 52-48 vote. The failed effort came just a day after Republicans blocked the voting rights measure from coming to a final vote. Democratic Senators Joe Manchin and Kyrsten Sinema voted with Republicans, demonstrating the clear divisions in the Democratic party. The Senate rules change would have implemented a “talking filibuster” which allows a bill to pass with only a 51-vote majority instead of the usual 60 votes. The legislation proposed by the Democrats on voting rights included the John Lewis Rights Advancement Act and the Freedom to Vote Act. If passed, the bill would restore Justice Department review of changes in election law in states with a history of discrimination and would create a federal standard for voting by mail and drop boxes. President Biden and Senate Majority Leader Chuck Schumer have pledged to continue fighting for voting rights reform.

Biden administration raises minimum wage for federal workers

The Biden administration has directed federal agencies to raise the minimum wage for government employees to $15 per hour by January 30th. The directive will impact nearly 70,000 workers, most of which work at the Departments of Agriculture, Defense, and Veterans Affairs. This news comes as many states and cities plan to raise their minimum wage rates in 2022, with many exceeding the $15 rate.

Corporate/Sector News

Intel announces $20 billion new chip manufacturing facility near Columbus, OH

Intel has announced plans for a $20 billion new chip manufacturing facility near Columbus, OH as it tries to reclaim its edge in chipmaking technology. Construction on at least two semiconductor fabrication plants will begin this year and is expected to be operational by 2025. In an interview with Time magazine Intel CEO Pat Gelsinger said, “Our expectation is that this becomes the largest silicon manufacturing location on the planet.”

Microsoft purchases Activision in $69 billion deal

This week, Microsoft announced it is buying gaming company Activision Blizzard. Microsoft will acquire the company for $95.00 per share in an all-cash transaction valued at nearly $69 billion. The purchase is the biggest deal in Microsoft’s history and the tech industry’s largest takeover. The deal will also make Microsoft the world’s third-largest gaming company by revenue. Gaming is the largest and fastest-growing form of entertainment today. Satya Nadella, chairman and CEO of Microsoft said in the company’s official statement, “We’re investing deeply in world-class content, community and the cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive and accessible to all.”

Verizon and AT&T delay implementation of 5G networks…again

Verizon and AT&T have delayed the rollout of their 5G networks around US airports for the third time in the last two months as concerns over aircraft interference remain. The Federal Aviation Administration is concerned that new cellular frequencies could endanger aircrafts. While the decision from Verizon and AT&T came on Tuesday, a day before the planned deployment, it was too late for many airlines to adjust flight schedules. Amid the 5G issues, Dubai’s Emirates suspended flights to nine US cities, and other airlines, including Japan’s two major airlines, British Airways, and Korean Air Lines, among others, canceled flights or switched aircraft models for those headed to the US this week.

This week from BlackSummit

The Wooden Nickel – The BlackSummit Team

Geopolitical Challenges & Statecraft – Rachel Poole & Tyler Thompson

Image of the Week

Video of the Week

Teen makes record-breaking solo flight around the world | DW News – Source: DW News