Weekly Market Update
Weekly Market Update
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Author : The BlackSummit Team
Date : August 26, 2023
Global Market News
Global equities mixed
Global equities were mixed this week. The Dow was down -0.45%, the S&P rose 0.82%, and the Nasdaq gained 2.26% over the week. The US 10-year Treasury dropped a couple of basis points but remained high at 4.23%, while the price of a barrel of West Texas Intermediate crude was little changed, ending the week at $80.04. Volatility, as measured by the CBOE Volatility Index, fell to 15.68.
Fed says rate hikes are far from assured
Federal Reserve Chair Jerome Powell’s recent statements, coupled with statements from other Fed officials, have signaled that rates may not have to rise further if inflation continues to get closer to the Fed’s 2% target, but restrictive policy is to be kept in place until it reaches that point. However, the Chairman indicated the central bank was prepared to hike rates further if necessary. Equity markets reacted well to the news that further rate hikes are not assured.
International Developments
6 new members invited to BRICS
The BRICS grouping, which met in Johannesburg, South Africa August 22 – 24, announced its first expansion to the bloc since South Africa was added to the BRIC grouping in 2010. BRICS has formally invited Argentina, Egypt, Ethiopia, Saudi Arabia, and the United Arab Emirates, whose membership will take effect in January 2024. The expansion, which marginally increases BRICS’ overall economic clout as a bloc, is positioning itself as a non-Western rival to the G7.
Uptick in drone attacks on Russia as Prigozhin reportedly killed in plane crash
Russia’s Defense Ministry has reported a significant uptick in Ukrainian drone attacks on Russia in Crimea and in Russia-proper, while Russian missile and drone attacks have continued to hit across the whole of Ukraine. The uptick comes following the shocking plane crash that reportedly killed Evgenii Prigozhin, leader of the Wagner private military group which attempted a coup on Moscow in June. Russian President Vladimir Putin has acknowledged the crash and offered condolences to the victims, without explicitly referring to Prigozhin by name. Nonetheless, the Russian state reported the death of Evegenii Prigozhin, while sharply denying that Prigozhin had been killed on orders from the Kremlin.
US Social & Political Developments
US and Venezuela in talks for sanction relief
Washington has floated the possibility of sanctions relief in exchange for Venezuela holding competitive elections in 2024 and freeing political prisoners. Observers believe that while the Nicolás Maduro regime may be willing to make some minor concessions, anything that would threaten Maduro’s ability to get reelected would likely prove a nonstarter. Any potential deal would need to come soon, as the Venezuelan government is set to announce a new election board to oversee the upcoming election. The US government has sanctioned Venezuela for more than 15 years for a variety of reasons, including terrorism, drug trafficking, human rights abuses, and other forms of government corruption.
Biden pledges disaster relief in Hawaii
The Biden administration has pledged disaster relief after declaring the fires on Maui, Hawaii as a major disaster. Relief is set to include grants for temporary housing and home repairs, low-cost loans to cover uninsured property losses, in addition to other programs designed to help individuals and businesses affected. Thus far, $8.2 million in assistance has been disbursed to 2,700 houses, while meals, water, cots, blankets, and shelter supplies to assist those displaced. 388 people have been declared missing, and 115 dead in what has been the most deadly natural disaster in Hawaii’s history.
Corporate/Sector News
US mortgage rate reaches record high
US mortgage rates have reached a multidecade high at 7.31% for a 30-year fixed mortgage as inflation still runs hot, sending mortgage applications tumbling. The higher rates and tight housing inventory keep buyers away and current homeowners from putting their houses on the market, contributing to the tight supply. While analysts expect mortgage rates to wind down as inflation comes under control, they may not return to 5% in the near future.
SEC sets new regulations for private finance
The Securities and Exchange Commission (SEC) voted for new regulations for private funds, which manage over $25 trillion for pension plans, university endowments, and wealthy individuals, on Wednesday. The new rules regulate the funds ability to entice large investors by offering them special terms compared to other investors. Additional rules include requiring funds to provide investors quarterly financial statements and to undergo annual audits.
Nvidia nears record high after earnings report
Nvidia, the market’s favorite in the race for artificial intelligence (AI), issued an earnings report with a third-straight sales forecast that went beyond expectations. Stocks rose 8.7% to $512 after the firm announced sales would be $16 billion in Q3, far above the estimated $12.5 billion. Nvidia is profiting off the AI boom as data centers are facing high demand for AI tools and stocking up on Nvidia’s processors.
Recommended Reads
US Budget Deficits Are Exploding Like Never Before
Prigozhin’s presumed death sends signal to Russian elite
The global water crisis is already affecting 4 billion people
Is Germany once again the sick man of Europe?
Drastic Economic Moves Highlight Russia’s Wartime Bind
This week from BlackSummit
The BlackSummit Team
The BlackSummit Team
Image of the Week
Video of the Week
Madrid is building a ‘wind garden’ to cool down the city
Source: World Economic Forum
