Weekly Market Update

Author : Rachel Poole
Date : June 7, 2022

Global Market News

Global equities struggle to rebound

Global equities were down on the week, failing to continue last week’s rebound. The S&P 500 and Dow Jones closed the week down 1.20% and 0.94% respectively, while the Nasdaq declined 0.98%. The yield on the US 10-year Treasury jumped up to 2.94%. The price of a barrel of West Texas Intermediate crude oil climbed more than 4.5%, closing Friday at $120.31. Volatility, as measured by the CBOE Volatility Index, ended the week at 24.7.

Biden lays out plan to fight inflation

In a three-point plan published in a Wall Street Journal op-ed this week, US President Joe Biden outlined the ways he is going to tackle inflation. First, he has vowed to preserve the independence of the Federal Reserve, allowing it to lead the fight against inflation. Second, he will try to lower the cost of basic goods by asking Congress to pass clean energy tax credits and reduce the costs of prescription drugs and childcare, as well as increase the housing supply. Finally, he plans to reform the tax code to cut the federal budget deficit.

Updated Market Figures

Coronavirus Updates

Covid-19 by the numbers

Global Confirmed Covid-19 cases: 534,856,000 Global Covid-19 deaths: 6,319,000
US Confirmed Covid-19 cases: 86,450,000 US Covid-19 deaths: 1,033,000
*As of Friday evening

Shanghai reopens after two months of lockdown

The Covid-19 lockdown in Shanghai was finally lifted after more than two months. While the lockdown has been formally lifted and steps are being taken towards reopening, many restrictions remain in place and hundreds of thousands are still locked in their homes. Indoor dining is not allowed, shops are not operating at full capacity, theaters and gyms remain closed and most students will continue to attend school online. Shanghai residents who would like to use public transport or enter other public venues must have had a negative Covid test within 72 hours, and quarantine restrictions continue for those who travel to other cities in China. Many analysts expect the Chinese economy to contract in the second quarter primarily because of the lockdowns which have wreaked havoc on business and manufacturing activity.

International Developments

Ukraine updates: 100 days of war, EU reaches deal to ban Russian oil

The war in Ukraine hit a grim 100-day milestone this week. After 100 days of war, Russia controls about one-fifth of the country’s territory. NATO Director-General Jens Stoltenberg said Western countries should be prepared for a “war of attrition” in Ukraine. The Russian military has focused its attacks on the eastern Donbas region, but in the country’s south, Ukrainian forces have retaken twenty towns and villages. Earlier this week, the European Union (EU) reached a deal to ban most Russian oil imports. The deal, along with the German and Polish pledges to restrict pipeline imports, means the ban is expected to cover about 90% of Russian oil by the end of the year.

African Union meets with Putin to discuss food crisis

The chair of the African Union, Senegalese President Macky Sall, met with Russian President Vladimir Putin yesterday to discuss the food crisis that has resulted from Russia’s invasion of Ukraine. At the meeting, President Sall urged Putin to lift Russia’s blockade on urgently needed cereals and fertilizers from Ukraine. Russia and Ukraine account for more than 40% of Africa’s wheat imports. President Sall left Russia “reassured” after the three-hour meeting with the Russian president. The United Nations has warned that Russia’s naval blockade in Ukraine could lead to famines around the world.

US Social & Political Developments

US and Taiwan announce trade talks

The US and Taiwan have announced that they will hold trade talks in Washington, DC later this month. The agreement between the US and Taiwan – the US-Taiwan Initiative on Twenty-First Century Trade – is expected to be similar to the Indo-Pacific Economic Framework the Biden administration has developed with thirteen countries in the Pacific region. In response to the announcement, China warned Washington to “stop negotiating agreements with Taiwan that have sovereign connotations and official nature.”

Biden calls for assault weapons ban

President Biden has called on Congress to ban assault weapons, as well as implement a range of gun-control measures including background checks, a raise in the buying age from 18 to 21, and red flag laws. President Biden’s speech to Congress comes just a day after the 233rd mass shooting in the US took place in Tulsa at a hospital and just a week after the Uvalde school shooting.

Corporate/Sector News

OPEC agrees to accelerate oil output

OPEC, led by Saudi Arabia, has agreed to increase oil production by about 650,000 barrels a day in July and August in an effort to bring down rising crude prices. However, crude prices weren’t helped much by the decision as 650,000 barrels is equivalent to only 0.7% of daily global demand. Furthermore, most OPEC members, with the exception of Saudi Arabia and the UAE, are already pumping at capacity and Russian oil output has fallen by 1 million barrels per day following Western sanctions over its war in Ukraine. President Biden is expected to visit Saudi Arabia this month and meet with Crown Prince Mohammed bin Salman, of whom he has been critical in the past, in an attempt to broker more oil output increases.

US LNG exports hit second-highest monthly record

The US exported 7.29 million tons of liquefied natural gas (LNG) last month, its second-highest month on record as sales to Europe and South America increased. The US is on track to become the world’s largest LNG exporter this year as producers work to boost liquefication capacity. More than two-thirds of exports in May went to Europe as customers demand more in anticipation of a reduction in Russian gas supplies.

GM’s robotaxi gets the green light in San Francisco

General Motors’ Cruise has been given the green light by the city of San Francisco to operate its commercial, driverless ride-hail service, making it the first and only company to receive such a permit. San Francisco officials say the driverless Cruise AV appears to operate as a “cautious and compliant defensive driver”, and Cruise has promoted its safety track record by noting that its vehicles understand complex social dynamics and default to safety actions. Cruise’s cars are also fully electric and battery-powered.

This week from BlackSummit

The Wooden Nickel – The BlackSummit Team
The Day After & the Era of Transformation – The BlackSummit Team

Image of the Week

Video of the Week

U.S. vs. China: The Race to Build Hypersonic Missiles
Source: The Wall Street Journal