Weekly Market Update

Author : The BlackSummit Team
Date : March 16, 2024

Global Market News

Global equities unchanged

Global equities were relatively unchanged on the week. The S&P 500 fell 0.12% while the Dow Jones declined only 0.02% from last Friday. The Nasdaq saw a bigger change this week, decreasing 0.70%. The US 10-year Treasury note rallied, jumping back up to 4.30%. Meanwhile, the price of a barrel of West Texas Intermediate increased a few dollars, closing Friday at $80.55. Volatility, as measured by the CBOE Volatility Index, ended the week at 14.41.

Japan expected to exit negative rate policy, US investors become less confident in rate cuts

Following the news of wage settlements with Japanese labor unions which will lead to wage hikes of about 5.3%, the Bank of Japan (BOJ) is expected to end its negative interest rate policy for the first time in nearly a decade. The move could happen as soon as Tuesday which is the central bank’s next rate-setting meeting. Meanwhile, US investors are becoming less confident in when the Federal Reserve will begin cutting rates as the chance of a cut in June has declined from 96% to only 61%. Furthermore, the possibility of only two rate cuts instead of three this year has grown.

International Developments

Political pressure on Israel grows while humanitarian organizations work to deliver aid to Gaza

Ceasefire talks remain in limbo, with Israel accusing Hamas of stalling to inflame violence during Ramadan. President Joe Biden warned Israel against attacking Rafah in southern Gaza, which Israel believes is the last bastion of Hamas. Meanwhile, Senator Chuck Schumer called for new elections in Israel, criticizing Prime Minister Benjamin Netanyahu’s alignment with far-right extremists and tolerance of civilian casualties in Gaza. Humanitarian organizations are working to deliver aid to Gaza using new land and maritime routes, with the first aid shipment via sea reaching Gaza today. Aid agencies have repeatedly accused Israel of impeding access, especially in reaching northern Gaza where the need is greatest, but Israeli officials deny the claims.

Putin’s victory certain amidst repression of opposition

This weekend Russia begins voting in a presidential election poised to secure Vladimir Putin’s leadership for another six years, as the opposition faces severe suppression, with key figures like the late Alexei Navalny sidelined by imprisonment, exile, or death. Amidst this backdrop, acts of vandalism at polling stations, including firebombing and the pouring of green liquid into ballot boxes, have emerged as forms of protest. The election’s legitimacy is further questioned by limited independent monitoring, with few international observers present. The Organization for Security and Cooperation in Europe’s monitors were not invited, and only registered candidates or state-backed bodies can assign observers, thus severely limiting independent oversight.

Haitian Prime Minister Ariel Henry resigns amidst pressure over crime crisis

Haitian Prime Minister Ariel Henry has announced his resignation in response to international pressure to address Haiti’s security crisis. During Henry’s administration, armed criminal groups in Haiti grew, leading to increased violence and chaos, including the release of thousands of prisoners and displacement of over 15,000 people. The international community, led by the US, plans to support Haiti with a new council responsible for immediate needs. The United States has also deployed a specialized Marine unit to help secure the US Embassy in Haiti in the meantime. Kenya, however, has decided to pause its deployment of police officers to lead an international security mission in Haiti until there is an authority with constitutional legitimacy in the country.

US & Political Developments

Biden and Trump secure enough delegates for presidential rematch

President Biden and former President Trump have secured their parties’ presidential nominations, setting the stage for a general election rematch. Biden has emphasized the threat he believes Trump poses, while Trump has focused on defeating Biden and getting retribution for his 2020 defeat. Biden faces challenges with certain voter groups due to both his age and his handling of the war in Gaza, while Trump’s legal battles loom over his campaign.

Biden’s 2025 Budget

US President Joe Biden unveiled a massive $7.3 trillion federal budget plan that includes only marginal increases for defense, diplomacy, and foreign aid. The budget includes a 1% increase in the defense budget, a 4.5% pay raise for US troops, and plans for strategic investments such as long-range hypersonic weapons and ballistic missile defense. Despite criticism from both foreign-policy and budget hawks, the proposal underscores the administration’s attempt to balance domestic and foreign-policy priorities. The budget also allocates $64.4 billion for foreign affairs, with $4 billion aimed at countering China’s global influence. Sea power and nuclear weapons are predicted to be two of the main areas of budgetary haggling in the coming months.

Corporate/Sector News

Bill to have ByteDance divest from TikTok passes through House

The US House of Representatives overwhelmingly approved a bill that would force Chinese parent company of TikTok, ByteDance, to sell the app or have it banned from US app stores. The bill’s proponents, made up of Democrats and Republicans, say that Chinese ownership of the app is a national security threat, as ByteDance could share Americans’ data to Beijing. The bill still needs to pass the Senate, and it may face hurdles in the courts over First Amendment complaints. TikTok has denounced the bill and said it will fight against the measure.

Boeing’s continuing woes

Large airlines are weighing their options amid Boeing’s increasing production quality issues, with some even considering switching suppliers entirely. Boeing’s bad publicity as of late ranges from a door blowing off during a flight to a 777 making an emergency landing after discovering a hydraulic fluid leak. United Airlines has asked Boeing to stop building 737 Max 10s, and Delta Air is delaying Max 10 deliveries for two years. Boeing’s stock price has plunged more than 10% over the last month.

EU passes landmark AI regulation

The European Union’s parliament passed the world’s first significant regulation dealing with artificial intelligence (AI). The EU AI Act categorizes the technology into levels of risk, from “unacceptable” (which would have the technology banned) to high, medium, and low hazard. EU officials hailed the regulation, which they say makes the bloc the “global standard-setter in AI.” However, there are some worries that such regulation could stifle the burgeoning technology – especially against competition from American and Chinese companies.

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