Weekly Market Update

Author : Rachel Poole
Date : February 25, 2023

Global Market News

Global equities decline

Global equities were lower on the week as investors priced in additional rate hikes from central banks due to stubborn inflation. The S&P 500 and Dow Jones were down 2.67% and 2.99% respectively, while the Nasdaq dropped 3.33%. The yield on the US 10-year Treasury rose to 3.95% and the price of a barrel of West Texas Intermediate crude oil ticked up slightly to $76.59. Volatility, as measured by the CBOE Volatility Index, closed the week at 21.67.

Gas consumption in the EU falls evading fears of energy crisis

Thanks to conservation measures and a mild winter, gas consumption in the European Union (EU) between August and January was 19% below average for the first time in 5 years. Meanwhile, storage facilities are more than 50% full, and gas supplied through Russian pipelines has fallen from about 50% to less than 10%, easing fears of an energy crisis resulting from the war in Ukraine. A multitude of new agreements between the EU and its allies has made up for the shortfall.

Updated Market Figures

International Developments

Ukraine war hits one-year anniversary

Yesterday marked the one-year anniversary of Russia’s invasion of Ukraine. For the anniversary, the United Nations General Assembly passed a resolution calling for Russia to withdraw its troops. Also this week, China published a 12-point position paper for ending the war, but it has been criticized by NATO and Western leaders as lacking credibility. Earlier in the week, US President Joe Biden made a surprise visit to Ukraine prior to the White House announcing $2 billion in new military aid and new sanctions targeting individuals and entities that have aided Moscow.

Nigeria prepares for presidential election

Tomorrow, Nigerians will head to the polls for the country’s highly-anticipated presidential election. The election is being watched as an indicator for the West African country’s state of democracy as it will be the most open, closely contested vote since Nigeria returned to democracy in 1999. Candidates from the country’s major parties, Bola Ahmed Tinubu and Atiku Abubakar, are running very closel in the polls with third party candidate Peter Obi. Following what has been months of heightened political tensions and some reports of political violence, the eighteen presidential candidates participating in the election signed an agreement this week to ensure the vote will be free, fair, and peaceful.

US Social & Political Developments

White House announces plan to restrict asylum at US-Mexico border

The US Departments of Homeland Security and Justice announced new immigration policies surrounding requests for asylum at the US border. Migrants – with the exception of those with medical emergencies, those facing imminent threats from violent crime, and children traveling alone – arriving at the US border will be denied asylum if they have not first applied for asylum in the countries they have traveled through. Civil rights and migrants rights groups have criticized the plans while Biden administration officials argue they have done much to expand pathways for migrants to come to the US.

US to increase troops deployed to Taiwan for training

A few days after a senior Pentagon official visited Taiwan, the White House announced its plans to deploy between 100-200 troops to Taiwan to train the Taiwanese military. The plan more than quadruples the current number of US military personnel on the island. The specifics of the training program are little known as the Pentagon has taken measures not to publicize it, though the program aims to bolster Taipei’s abilities to defend itself against China.

Corporate/Sector News

Supreme court case to shape the future of online speech

The Supreme Court began hearing oral arguments this week in Gonzalez vs. Google, a landmark case that will likely determine the future of online speech. The case concerns extremist clips on YouTube and the death of Nohemi Gonzalez, a 23-year-old American that was killed in the 2015 Paris attacks. The prosecution has specifically called into question Section 230 of the Communications Decency Act passed in 1996 which protects tech companies from liability for their users’ posts on their websites. Similarly, the ongoing case Twitter vs. Taamneh involves terrorist posts and algorithm recommendations.

Tesla recalls “full self-driving” vehicles

Following a report from the National Highway Traffic Safety Administration that Tesla’s driver-assistance system allows vehicles to travel in “an unlawful and unpredictable manner”, Tesla will roll out a voluntary recall of 362,000 of its “full self-driving vehicles”. Testing and analysis completed by the national safety agency found that a part of Tesla’s Full Self Driving driver-assistance system could create “an unreasonable risk to motor vehicle safety based on insufficient adherence to traffic safety laws.”

Retail earnings bring mixed bag of worries and hopes to markets

Walmart and Home Depot kicked off Q4 retail earnings this week, bringing a mixed bag of solid trends and worrying data regarding consumer confidence and the health of the US economy. While Walmart announced strong comparable sales and a dividend boost, shares dipped on Tuesday after it set cautious profit guidance for the year. Home Depot’s stock price closed down several percentage points on the week after reporting that earnings beat consensus forecasts but that sales fell short. Home Depot disappointed investors with its profit guidance for the year as well.