The BlackSummit Team | March 25, 2023

Global Market News

US Equities Rise

The S&P 500 was up 1.39% on the week while the Dow Jones closed up 1.18%, with the Nasdaq rising 1.66%. The US 10-year Treasury yield slid to 3.37% while the price of a barrel of West Texas Intermediate crude oil rose 3.75% over the week to $69.24. Volatility, as measured by the CBOE Volatility Index, dropped to 21.74.

Federal Reserve Raises Rates 25bps

The Federal Reserve once again raised interest rates on Wednesday, continuing its battle against inflation despite cracks appearing in the financial system after the collapse of two regional banks. The benchmark interest rate was raised by a quarter-percentage point to just below 5%. Fed analysts expect rates to be raised by another quarter-percentage point by the end of 2023.

Updated Market Figures

International Developments

Putin and Xi Hold Meetings in Moscow

Chinese President Xi Jinping met with his Russian counterpart in Moscow in a show of solidarity against the West. The leaders touted the warm relations between their two countries and accused the West of undermining global security. While Washington had raised concerns of Xi escalating China’s support of the Russian invasion of Ukraine, there was no sign of direct military support being sent to Russia.

IMF Approves Bailout for Sri Lanka

The IMF approved a $3 billion rescue package for debt-laden Sri Lanka. The bailout materialized after China, the island nation’s largest bilateral creditor, agreed to restructure its loans to the country. Sri Lanka has been embroiled in its worst-ever financial crisis, leading to soaring costs of living for its citizens. The first round of funds will be used to bolster the country’s healthcare and tourism sectors, which have borne the brunt of the crisis.

US Social & Political Developments

Biden Vetoes Anti-ESG Bill

President Biden vetoed a Republican-led House bill that would have banned the consideration of environmental, social, or governance issues in official pension and retirement investments. The bill would have reinstated a Trump-era policy that also banned the investing practice. The House failed to override the veto with the vote falling mostly along party lines. 

US Strikes Iranian Facilities in Syria Following Death of Contractor

The US conducted an airstrike in Syria against Iranian-affiliated facilities after an alleged Iranian drone attack killed an American contractor in the country and wounded an additional five US service members. A group monitoring Syria claimed that eight Iranian-affiliated fighters were killed in the airstrike, but official results are still to be determined. US officials stated that the US is prepared for additional strikes if Americans are attacked again.

Corporate/Sector News

UBS Buys Credit Suisse

Switzerland’s biggest bank, UBS, is in the midst of buying its imperiled rival, Credit Suisse, as an emergency measure to calm financial panic after the failure of two American regional banks. UBS is paying $3.25 billion for Credit Suisse, around 60% below the bank’s market value as of last week. US financial regulators welcomed the takeover and commended the Swiss government’s swift action to facilitate the deal.

TikTok CEO Testifies to Congress

TikTok’s CEO Shou Zi Chew answered lawmakers’ questions about the company’s ties to the Chinese government. US officials claimed the Chinese-owned company could be forced to share US user data with the Chinese government, given that Beijing exerts significant leverage over businesses under its jurisdiction. Chew’s answers were largely panned by lawmakers over the five-hour hearing.

Google Rolls Out AI Chatbot

Google released its alternative to Microsoft OpenAI’s ChatGPT, the Bard chatbot, to the public this week, allowing users in the US and Britain to begin testing the product. As with Microsoft’s product, the AI’s predictive text model has been known to produce inaccurate or biased information in its responses. While AI is expected to revolutionize search engine technology, both companies have a long and competitive road ahead to integrate the new technology.

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Source: DW News