Weekly Market Update

Author : Rachel Poole
Date : June 28, 2022

Rachel Poole Mustor | June 25, 2022

Global Market News

Global equities rebound

Global equities were higher on the week with markets rebounding sharply Friday afternoon. The S&P 500 and Dow Jones advanced 6.45% and 5.39% respectively, while the Nasdaq jumped 7.49%. The yield on the US 10-year Treasury decreased to 3.13% while the price of a barrel of West Texas Intermediate crude oil continued falling, closing Friday at $107.60. Volatility, as measured by the CBOE Volatility Index, ended the week at 27.2.

Global economy shows signs of growth slowdown

Purchasing managers’ indices for the US and eurozone in June show that the pace of economic growth has slowed. Though service readings remain above 50 – the level that separates growth and contraction – the US manufacturing PMI came to a 23-month low while the eurozone came to a 22-month low. As recession fears build, the prices of raw materials and interest rates have fallen. According to a paper published by the US Federal Reserve, the central bank puts the odds of a recession in the next 12 months at 50% and the probability of one over the next two years at 66%.

Updated Market Figures

International Developments

EU grants candidacy to Ukraine as war continues

On Thursday, European leaders formally agreed to grant Ukraine, as well as Moldova, membership candidacy. Though the process of becoming a member of the European Union could take years, it is a symbolic victory for Ukraine amid Russia’s war. Russian forces have been gaining in eastern Ukraine, taking the city of Severodonetsk, and leaving the city of Lysychansk as the last Ukraine-controlled area in the Luhansk province. Ukrainian President Volodymyr Zelensky continues to call for heavy weapons and additional military support.

Israel dissolves parliament

The government of Israeli Prime Minister Naftali Bennett and Foreign Minister Yair Lapid has dissolved parliament and announced new elections, bringing the country to its fifth vote in less than four years. Bennett and Lapid’s coalition has been unable to pass legislation after losing its parliamentary majority in April. The eight-party coalition, which was ideologically very diverse, lasted barely a year. Polls suggest former Prime Minister Benjamin Netanyahu’s Likud party could be the largest in a new parliament.

US Social & Political Developments

The Supreme Court overturns Roe v. Wade

The US Supreme Court officially overturned Row v. Wade yesterday, holding that there is no longer a federal constitutional right to an abortion. The official decision comes just a couple of months after a draft of the decision was leaked. The legality of abortion now rests with state legislators. 26 states currently have laws indicating they intend to ban abortions given the Supreme Court’s decision.

Biden calls on Congress to suspend gas tax

US President Joe Biden has called on Congress to suspend the $0.18 federal gas tax for three months as oil prices remain elevated. President Biden has also called on states to do the same and is urging oil and gas companies to boost production and pass on savings to consumers. Gas prices have risen approximately $2 per gallon since Russia began its war with Ukraine in February. Economists from both political parties are skeptical that suspending the tax can actually lower prices at the pump.

Corporate/Sector News

China’s chip industry is the fastest growing in the world

China’s chip industry is growing faster than any other chip industry in the world. US sanctions have encouraged the development of domestic firms. Now, 19 of the world’s 20 fastest-growing chip industry firms are from China, according to data from Bloomberg. Last year, this number was only 8. The statistic underscores the impact US-China tensions have had on the semiconductor industry. Through a variety of programs, Beijing plans to invest billions more into the industry as it seeks self-sufficiency.

FDA orders JUUL off the shelves

The Food and Drug Administration (FDA) has ordered JUUL products off the shelves of US retailers due to the company’s “disproportionate role in the rise in youth vaping.” The order only pertains to the commercial distribution, importation, and retail sales of JUUL products and does not have anything to do with individual consumer possession. Many expect the company to appeal the FDA decision since competitors like British American Tobacco and Japan Tobacco have been granted market access.

Canada announces ban on single-use plastics

Canada has announced a plan to ban “harmful” single-use plastics. Aside from a few medical exceptions and specific cases, most plastic bags, disposable cutlery, and plastic straws will be banned as the country seeks to fight pollution. Prime Minister Justin Trudeau said, “Over the next 10 years, this ban will result in the estimated elimination of over 1.3 million tons of plastic waste and more than 22,000 tons of plastic pollution.” The order will push businesses to seek new solutions and plastic alternatives which may prove to be difficult as problems continue to plague global supply chains.