Weekly Market Update

Author : The BlackSummit Team
Date : February 11, 2023

Global Market News

Global equities decline

Global equities were lower on the week. The S&P 500 and Dow Jones were down 1.11% and 0.17% respectively, while the Nasdaq dropped 2.41%. The yield on the US 10-year Treasury jumped up several basis points to 3.74%. The price of a barrel of West Texas Intermediate crude oil climbed to $79.82 on news that Russia will cut oil output. Volatility, as measured by the CBOE Volatility Index, increased slightly to 20.53.

Central banks increase rates

Following in the footsteps of the US Federal Reserve, several central banks raised rates this week as they continue to fight inflation. Mexico’s central bank raised rates by half a point, bringing it to a steep 11%, and signaled more hikes would come. The central banks of Sweden, Australia, and India increased their rates as well. On the other hand, Canada has paused rate hikes reportedly due to the high level of homeowner indebtedness. While there may be signals that inflation is cooling, the battle against it is far from over.

Updated Market Figures

International Developments

Turkey & Syria endure devastating earthquake

Turkey and Syria experienced a magnitude 7.8 earthquake, followed by a second of 7.5 magnitude, both of which have sown devastation across the two countries. The death toll, as of Friday’s estimates, has risen to over 21,000 with another 81,000 injured. In addition, significant damage to infrastructure across the affected regions has been recorded, while hundreds of thousands of individuals have become homeless due to the destruction. Humanitarian aid has begun flowing to assist victims, including $85 million to be disbursed through USAID.

Russia escalates attacks on Ukrainian infrastructure

Russia fired 71 missiles across Ukraine on Friday, according to Ukrainian officials. The missiles targeted the country’s infrastructure, such as thermal and hydropower generation facilities, forcing more electrical shutdowns in Ukraine. Officials credit Ukrainian air defense forces in shooting down 61 of the missiles down, alleviating what could have been a devastating attack on the nation’s energy system. President Volodymyr Zelenskiy cast the attacks as revenge for the president’s recent trips abroad to visit allies.

US Social & Political Developments

President Biden delivers State of the Union address

President Biden delivered the annual State of the Union Address on Tuesday to a split-party Congress. The address covered a wide range of topics, including the national debt, pharmaceutical prices, the economy, infrastructure, and relations with China. At certain points, the event turned raucous as some Republicans forewent decorum by heckling and jeering the president throughout the speech.

Chinese spy balloon continues to strain US-China relations

US officials have alleged that the spy balloon that was recently shot down was part of a fleet of surveillance balloons that China has deployed over five continents. Japan and Mexico are among other nations that have also reported cases of suspect balloons flying over their nations. The Pentagon reported that China declined a phone call between the Secretary of Defense Lloyd Austin and his Chinese counterpart after the US downed the balloon. This incident happened after China called the downing of the balloon an overreaction and lodged a formal complaint with the US embassy in Beijing.

Corporate/Sector News

EU bans diesel imports, Russia cuts oil output

The European Union has banned the import of refined oil products, such as diesel fuel. Diesel prices have already risen since the start of the war on February 24, 2022 and the move is set to impact the global fuel economy worldwide, with many countries such as India and China continuing to resist similar bans. In response to Western sanctions, Russia is set to cut its oil output by 500,000 barrels, or around 5% of Russian oil production. Brent oil futures have risen 1.7% to $86 a barrel in response to the announcement as traders anticipate tightening supplies.

Disney announces earnings beat and layoffs

Analysts are upbeat about Disney’s Q4 earnings as the company beat consensus estimates. Building on the positive earnings, returning Disney CEO Bob Iger has announced that the company plans to reduce costs by $5.5 billion dollars through about 7,000 layoffs and business reorganization, including plans to shift focus away from growth at all costs and the percentage of the streaming subscriber base. Disney’s management has struggled to bring the company’s stock price back up over the last year amidst market turmoil and political controversy.

Unliver invests in Mexico as “nearshoring” destination

Unilever has announced it will build a plant in Mexico as part of a $400M investment in the country over the next three years. The manufacturing plant will produce beauty and personal care products, and the company estimates it will create 1,200 new jobs. Unilever is one of several major companies like Mattel or BMW that have invested in Mexico as a part of a trend called nearshoring, where supply chains are brought closer to their final destination.

This week from BlackSummit

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Image of the Week

Video of the Week

UN aid finally reaches Syria amid pleas for rescue help

Source: BBC