Weekly Market Update

Author : The BlackSummit Team
Date : February 17, 2024

Global Market News

Global equities decline

Global equities were lower on the week amid an uptick in US inflation and waning hopes of rapid rate cuts. The S&P 500 and Dow Jones declined 0.42% and 0.11% on the week respectively, while the Nasdaq lost 1.34%. The US 10-year Treasury note rose sharply, closing Friday at 4.28%. Meanwhile, the price of a barrel of West Texas Intermediate continued to climb this week, reaching $79.26. Volatility, as measured by the CBOE Volatility Index, rose to 14.24 from 12.9 last Friday.

Inflation comes in hotter than expected

Consumer prices rose 0.3% month-over-month in January, rising more than expected. On a year-over-year basis, inflation dropped to 3.1% from 3.4% in December but a greater decline to 2.9% was anticipated. The news has reignited fears that inflation is still out of control. As a result, US treasury yields soared this week, and the odds of a rate cut from the Federal Reserve in May are now only 29%, as compared to nearly 70% on Tuesday.

Updated Market Figures

International Developments

Alexei Navalny dies in Russian prison

Alexei Navalny, the most prominent critic of Russian President Vladimir Putin, died at age 47 in the Arctic penal colony where he was serving a 19-year sentence. Navalny, known for his anti-corruption campaigns and opposition to Russian President Vladimir Putin, was poisoned in 2020 and arrested upon his return to Russia. His death, just before a crucial election, has sparked outrage and renewed criticism of Putin’s regime. Despite facing imprisonment, torture, and numerous threats to his life, Navalny remained steadfast in his activism. Following the news of Navalny’s death, US President Joe Biden said “Make no mistake: Putin is responsible for Navalny’s death.” His passing leaves Russia’s opposition fractured, with fears of further government repression.

Violence in Lebanon escalates amid ongoing Gaza conflict

Israel retaliated with airstrikes in southern Lebanon following a Hezbollah rocket attack on northern Israel. Israel warned of intensified military action if attacks persisted, potentially targeting the Lebanese military. This escalation jeopardizes diplomatic efforts, including a French proposal for a 10-day de-escalation process, and has displaced over 150,000 people. In Gaza, the WHO voiced concerns over the potential closure of the Nasser Medical Complex due to Israeli forces surrounding it. Meanwhile, talks for a cease-fire between Israel and Hamas in Cairo stalled as Israeli Prime Minister Netanyahu reportedly instructed negotiators to refrain from participation, sparking outrage among the families of hostages in Gaza.

US Social & Political Developments

US Senate passes $95.3 billion aid bill for Israel, Taiwan, and Ukraine

The Senate passed a $95.3 billion aid package for Ukraine, Israel, and Taiwan following months of negotiations and amid Republican divisions. 22 Republicans joined Democrats to pass the package 70-29, citing the importance of supporting Ukraine against Russian aggression. The bill faces uncertainty in the House, where hardline Republicans aligned with former president Trump oppose it. The aid includes defense equipment for Ukraine and assistance for Israel’s conflict with Hamas, Taiwan, and humanitarian aid for Gaza.

House of Representatives impeaches Homeland Security Secretary

House Republicans voted to impeach Alejandro N. Mayorkas, the homeland security secretary, accusing him of willfully refusing to enforce border laws and breaching the public trust. This makes him the first sitting cabinet member to be impeached. The impeachment, largely supported by Republicans, is seen as a partisan indictment of President Biden’s immigration policies. However, Democrats and constitutional law experts have criticized the move, arguing that it is an unconstitutional attempt to resolve a policy dispute. The charges against Mayorkas are expected to be rejected in the Democratic-led Senate.

Corporate/Sector News

Volkswagen weighs business future in Xinjiang

Volkswagen is facing pressure to stop business operations in China’s Xinjiang region after a report alleged that forced labor was used in building a test track there. The carmaker says it’s discussing different scenarios with its Chinese partner about the future of its Xinjiang operations. This follows pressure on German companies to rethink ties with the region due to human rights concerns, including forced labor against the Uyghur minority population in the region. Bejing denies these allegations.

Nvidia surpasses Alphabet to become third-largest US Company

Nvidia’s stock rose on Wednesday, pushing its market capitalization past Google-parent Alphabet in a symbolic shift driven by the booming artificial intelligence (AI) sector. Nvidia surpassed Amazon the day before. This latest milestone cements Nvidia’s position as a titan of Wall Street, fueled by its dominance in AI chip sales. Now the third-largest US company behind only Apple and Microsoft, Nvidia is poised for continued growth with analysts predicting 118% annual sales increase.

Diamondback and Endeavor are merging

US oil giants, Diamondback and Endeavor, are merging in a $26 billion deal, creating a Permian Basin powerhouse. This consolidation echoes recent industry trends, promising efficiency gains and investor returns. The combined entity, majority owned by Diamondback shareholders, will become the third-largest Basin producer. While concerns about market dominance linger, the deal is poised to reshape the US energy landscape, establishing a significant player with Q4 2024 completion, pending regulatory approvals.

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