Weekly Market Update
Weekly Market Update
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Author : The BlackSummit Team
Date : March 18, 2023
Global Market News
Global equities mixed
Global equities were mixed this week as banking headlines continued to bring volatility. The S&P 500 was up 1.42% on the week while the Dow Jones closed Friday only a few points lower from last Friday, 0.15%. On the other hand, the Nasdaq rose 5.82%, wiping out last week’s losses. The US 10-year Treasury came down to 3.43% while the price of a barrel of West Texas Intermediate crude oil dropped more than $10 over the week, closing at $66.33. Volatility, as measured by the CBOE Volatility Index, rose to nearly 30 earlier this week, but settled at 25.51.
US banks rescue First Republic
Following the collapse of Silicon Valley Bank (SVB) and Signature Bank at the end of last week, many regional banks have faced heavy deposit outflows as fears of bank instability spread. First Republic Bank, a lender whose business model is similar to that of SVB, was put into receivership by the FDIC earlier this week. On Thursday, 11 of the US’ largest banks came together to form a rescue plan for First Republic Bank which entails the group depositing $30 billion with the struggling bank. To quell fears, Treasury Secretary Janet Yellen assured the Senate Finance Committee that the US banking system is healthy and that the plan announced last Sunday had been successful in containing the fallout of SVB and Signature Bank. Across the Atlantic, the embattled Swiss lender Credit Suisse received a $54 billion loan from Swiss National Bank after its shares tanked on news of the bank collapses in the US.
International Developments
Japan and South Korea hold first summit in 12 years
For the first time in 12 years, Japanese Prime Minister Kishida Fumio and South Korean President Yoon Suk-yeol held a summit to repair relations between the two countries. In the spirit of goodwill, Japan lifted export controls on South Korea prior to the meeting while South Korea dropped a WTO complaint it had filed against Japan. At the Tokyo summit, the leaders announced new cooperation on intelligence sharing and trade, and also vowed to cooperate against North Korea.
NATO countries send fighter jets to Ukraine, Xi Jinping to visit Moscow
Poland and Slovakia announced plans to send MiG-29 fighter jets to Ukraine, becoming the first NATO countries to send warplanes after the US, Germany, and the United Kingdom (UK) declined requests from Kyiv. The announcement came near-simultaneously with an announcement from the International Criminal Court (ICC) that it had issued an arrest warrant for Russian President Vladimir Putin for war crimes specifically against children. The updates prelude Chinese President Xi Jinping’s planned visit to Moscow next week for talks with President Putin on the war in Ukraine. It has been reported that the two leaders will also discuss military-technical cooperation and energy trade, and plan to sign several bilateral documents during the visit.
US Social & Political Developments
US surveillance drone downed by Russian fighter jets over the Black Sea
The latest event to escalate tensions between Washington and Moscow was the downing of a US drone over the Black Sea by Russian fighter jets. While Washington says the jets caused the surveillance drone to crash, citing video footage of two Russian jets releasing fuel on the drone, Moscow disputes the statements. The US State Department has summoned Russia’s ambassador to Washington.
White House approves oil-drilling project in Alaska
The Biden administration approved an oil-drilling project on federal land in Alaska this week, sparking criticism from climate advocates. The Willow Project is a decades long project set to extract up to 600 million barrels of oil. The White House approval is being praised by Alaska’s bipartisan congressional delegation as well as a coalition of Alaska Native tribes as the venture will bring a new source of revenue and jobs to the remote area of Alaska. On the other hand, climate advocates are planning to challenge the program in court, arguing the project will pose environmental and health risks and hurt the country’s ambitious climate goals.
Corporate/Sector News
Biden administration threatens to ban TikTok
The Biden administration has issued a warning against the owner of social media app TikTok, ByteDance, due to security concerns. The Committee on Foreign Investment told the Chinese company to sell its stake in the app or face a ban in the US. TikTok said a forced sale would not address the perceived security risks and instead has pledged to spend $1.5 billion on a program to safeguard US user data and content from Chinese government access.
Sanofi slashes prices for insulin
Sanofi will slash prices for its widely prescribed insulin, Lantus, by 78% in the US at the beginning of next year. The drugmaker will also implement a $35 price cap on out-of-pocket costs for Lantus for all patients with commercial insurance. The move is one in a wave of expected insulin price reductions by other drugmakers, including Novo Nordisk and Eli Lilly, as Congress seeks legal measures to bring down the costs of prescription drugs in the US. Senator Bernie Sanders proposed a bill earlier this month that would cap the price of insulin at $20 per vial.
Samsung to build five chip plants in South Korea
Over the next two decades, Samsung – the world’s largest manufacturer of memory chips, smartphones, and TVs – will invest $300 trillion to build 5 chip factories in South Korea. Samsung’s investment will play a major role in South Korea’s plans to develop a mega semiconductor hub in the country. South Korea’s Ministry of Trade, Industry, and Research intends to secure about $550 trillion in private-sector investment to “leap forward as a leading country in the middle of fierce global competition over advanced industries.” The news comes amid the US-led ban of semiconductor exports to China over national security concerns. Last week, the Netherlands joined the effort by imposing export restrictions on “the most advanced” semiconductor technology.
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This week from BlackSummit
The BlackSummit Team
The BlackSummit Team
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500,000 refugees have fled Ukraine: UN
Source: Financial Times
