Weekly Market Update

Author : The BlackSummit Team
Date : June 3, 2023

Global Market News

Global equities make gains

Global equities made gains this week as Republicans and Democrats came to an agreement to raise the US debt ceiling, staving off default. The S&P 500 and Dow Jones closed up 1.83% and 2.02%, respectively, while the Nasdaq gained 2.04%. The US 10-year Treasury yield dropped over the week, closing Friday at 3.69%. The price of a barrel of West Texas Intermediate crude oil ended the week at $72.00, despite some oil market turbulence over the last few days. Volatility, as measured by the CBOE Volatility Index, came down to 14.60.

US jobs report comes in unexpectedly strong

In May, non-farm payrolls unexpectedly increased by 339,000, exceeding the expectation of 195,000. On the other hand, a rise in the number of people in the labor force led to an increase in the unemployment rate from 3.5% to 3.7%, suggesting that new workers have entered the market but have not yet acquired jobs. The strong job report and the contradictory unemployment data have muddied the waters for the Federal Reserve as it considers a rate hike at the June meeting. While many thought there would be a pause in rate hikes, expectations for another raise at the June meeting have grown as a result of the jobs report and inflation remaining high.

Updated Market Figures

International Developments

Violent protests break out in Kosovo

Violent protests broke out on Monday in the Serb-majority border town of Zvecan when ethnic Serbs tried to storm the municipal offices, resulting in injuries to 30 NATO soldiers and 50 rioters. In response, NATO has increased its troop deployment to manage further unrest. Protests have since turned peaceful. The protests concern the installation of an Albanian mayor and other Albanian officials in an election that was overwhelmingly boycotted by the Serb majority. In addition to their removal, the protestors are also demanding the withdrawal from northern Kosovo of Kosovo’s special police force. The situation has stirred fears of a repeat of the 1998-1999 Kosovo War that left 10,000 dead and more than a million displaced.

Drone attacks hit Moscow, bringing the Ukraine war to Russian soil

Moscow was hit with a drone attack on Tuesday morning, with one drone striking a residential building. Damage to the building was minor and resulted in a small number of non-critical injuries. The Russian Ministry of Defense released a statement stating that of the eight drones used in the attack, all were destroyed, with three going down to jamming and five having been shot down by anti-aircraft systems. The drone attacks come on the heels of intensifying Russian aerial strikes on Kyiv and across Ukraine.

US Social & Politics Developments

Debt-ceiling bill passed in House and Senate

The Senate has passed President Biden’s and House Speaker McCarthy’s bipartisan debt ceiling package to increase the ceiling and avert a potential US government debt default. The package passed both the House and the Senate with bipartisan support, though the deal was more broadly supported by Democrats than Republicans in the Senate. The bill now heads to the president’s desk for signature. In response, Fitch Ratings has warned that it is mulling yet another credit downgrade for the US government over debt ceiling brinksmanship.

US and Taiwan sign trade deal as US expands activity in Indo-Pacific

The US is actively expanding its activity in the Indo-pacific region. On Thursday, the US and Taiwan signed a new trade deal to counter opposition from mainland China. The deal is set to strengthen commercial ties between America and Taiwan through improvements to customs, investment, and other regulations. Nonetheless, China has accused the US of violating agreements over the status of Taiwan and has demanded the US stop official contact with the island. Meanwhile, the US and Japan kicked off a first-ever maritime exercise with the Philippines coast guard. The weeklong exercise represents deepening security engagement between the three countries as China becomes increasingly assertive in the region.

Corporate/Sector News

Big Oil rejects climate proposals as US crude slumps

Shareholders of Exxon Mobil Corp and Chevron Corp strongly rejected calls for stronger measures to fight climate change at their annual meetings. The rejection demonstrates how support for fossil fuel firms’ activities to combat climate change have lost strength after supply worries rose following Russia’s invasion of Ukraine. This comes at a time when US crude oil slumps to a 10-week low as weak economic data from China causes worry about global demand.

Musk goes to China to visit Tesla Gigafactory

Elon Musk recently finished his tour of China in which he met with high-ranking officials, and Tesla suppliers, and visited the company’s Shanghai Gigafactory. China represents Tesla’s largest market outside of the US and is critical to the company’s supply chain as it accounts for more than half of its global output. The visit comes as China seeks to portray a foreign business-friendly environment as the country’s recovery from Covid lockdowns is stifling and geopolitical tensions with the US heat up.

Nvidia reaches $1 trillion market valuation

Nvidia Corp has become the first chipmaker to reach a $1 trillion market valuation as AI hype sent the stock soaring. Last week, the company reported earnings and its expectations for a surge in demand thanks to momentum in the AI market. This week, the company briefly hit the $1 trillion mark after announcing a new AI-focused chip that is better than its current offerings. The stock has risen by around 180% this year, much more than the firm’s rivals. Advanced Micro Devices Inc (AMD) only rose around 93% and is less than a third of the valuation of Nvidia.

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