Weekly Market Update

Author : The BlackSummit Team
Date : September 22, 2023

Global Market News

Global equities decline

Global equities were down on the week as Treasury yields surged to new highs. The Dow Jones lost 1.89%, while the S&P 500 fell 2.93%. The Nasdaq came down 3.62% on the week. The US 10-year Treasury rose to as high as 4.5% this week before coming down to 4.43%. Meanwhile, the price of a barrel of West Texas Intermediate crude declined slightly to $90.34. Volatility, as measured by the CBOE Volatility Index, rose several points to 17.20.

Fed keeps rates unchanged, bond yields soar

The Federal Reserve chose to keep rates unchanged this week, signaling its belief that a US recession is less likely and a “soft landing” is possible. The central bank also indicated that it would keep interest rates higher for longer. Following the Fed’s hawkish pause, a global selloff in bonds brought US Treasury yields to their highest since prior to the global financial crisis.

Updated Market Figures

International Developments

Canada-India Diplomatic Crisis

Canadian Prime Minister Justin Trudeau has accused “agents of the government of India” in the murder of Hardeep Singh Nijjar, a Sikh nationalist living in Canada who supported Punjab independence from India. Mr. Nijjar had become the president of a Sikh temple in Surrey, British Columbia, the Guru Nanak Sikh Gurdwara in 2020, the same year that the Indian government declared him a terrorist for allegedly plotting a violent attack in India as leader of a terrorist group called the Khalistan Tiger Force. The Indian government has denied any involvement, and the spat has turned into a diplomatic crisis for the two countries. Since the initial accusations were made, both countries have expelled each other’s diplomats and India suspended visa services for Canadians.

Nagorno-Karabakh Ceasefire

In a Russia-brokered ceasefire, leaders in the Armenian enclave of Nagorno-Karabakh have surrendered to Azeri forces after Azerbaijan launched an “anti-terrorist operation” in response to the deaths of six Azeris following two landmine explosions. Negotiations are ongoing to settle the conflict, which has been alternating between hot war and unstable peace since the collapse of the Soviet Union in the 1990s. Azerbaijan has maintained the upper hand since 2020 when it launched an offensive that saw it make gains against a weakened Armenia. Both the United States and Russia have condemned Azerbaijan’s recent actions.

US Social & Political Developments

Looming government shutdown

House Republicans have scuttled a procedural vote on bringing Department of Defense funding to the floor, frustrating Speaker of the House Kevin McCarthy and GOP leadership in their effort to fund the government. A potential shutdown fight is set to ensue next week. While House Republicans had initially planned to pass a stop-gap funding bill over the weekend, that plan has now been put on ice with the vote. House leadership has sent lawmakers away for the week, with lawmakers set to return on Tuesday.

US-Iran swap prisoners

The Biden administration has secured a prisoner swap, whereby the US traded five detained Iranians and unfroze nearly $6 billion in sanctioned South Korean oil payments to Iran for five detained Americans. Three of the prisoners were named, while the other two were not immediately identified. Two of the Iranians released were in prison for the attempted acquisition of equipment that could be used for warfare and for unlawfully exporting laboratory equipment to Iran respectively.

Corporate/Sector News

United Auto Workers strike

United Auto Workers is striking, demanding cost-of-living increases, profit sharing, and job security from Ford, General Motors, and Stellantis. Analysts have estimated that by Friday, GM, Ford, and Stellantis have lost production of over 16,000 vehicles since the strike began – losses of over $1.6 billion. The union expanded the strike Friday to 38 more GM and Stellantis parts-distribution centers in an effort to increase the pressure on those two firms. Ford was spared due to the company meeting some of the union’s demands. While the impact has not been felt by consumers, the strikes could eventually push new, American car prices higher in the future.

Foxconn pledges doubled investment in India

Taiwan-based Foxconn, the supplier of Apple, has announced its intention to increase investment and production in India in the next year, largely in the south of the country. The announcement was made via Foxconn’s representative in India, who marked the 73rd birthday of Indian Prime Minister Narendra Modi in the same post. The company already has a factory in the country that employs 40 thousand people, and it has announced a $600 million investment for two projects to expand production.

Microsoft closing Activision deal after legal battles

Microsoft is close to finishing its $69 billion acquisition of video game company Activision Blizzard after receiving approval from UK judges. The EU acquiesced in May, and the United States Federal Trade Commission’s efforts to block the deal were rejected in July. Both companies have until October 18th to finish the deal.

Image of the Week

Video of the Week

The US Wants a Piece of China’s Solar Business

Source: Bloomberg