Weekly Market Update

Author : The BlackSummit Team
Date : January 27, 2024

Global Market News

Global equities make gains

Global equities made gains this week. The S&P 500 notched record highs this week before lowering on Friday, but still posting a weekly gain of 1.06%. The Dow Jones increased 0.65% on the week, while the Nasdaq grew 0.94%. The US 10-year Treasury note was relatively unchanged, closing Friday at 4.14%. Meanwhile, the price of a barrel of West Texas Intermediate crude jumped 6.46% to $78.15 amidst an escalation of strikes in the Red Sea region. Volatility, as measured by the CBOE Volatility Index, ended the week at 13.26.

US economic growth exceeds expectations

In the fourth quarter of 2023, the US economy grew 3.3% at an annualized rate and adjusted for inflation. The growth rate came in much stronger than the predicted 2%. Overall, the US economy grew 2.5% in 2023 and inflation moderated at a faster rate than anticipated. December’s reading of the core personal consumption expenditures (PCE) – the Fed’s preferred inflation measure – came in at 2.9% on an annual basis for December, the lowest inflation rate we’ve seen in the last 3 years.

International Developments

NATO approves aid, begins largest military exercises, and paves the way for Sweden’s accession

This week the international sphere saw significant developments regarding NATO. On Tuesday, NATO signed a $1.2 billion contract to produce tens of thousands of artillery to replenish supplies for member countries supporting Ukraine. Also this week, NATO began its largest military exercise since the end of the Cold War, with 90,000 troops from its member states taking part in a range of drills over the next 6 months. Finally, the latter half of the week witnessed Turkey’s formal ratification of Sweden’s application to join NATO, leaving Hungary as the only remaining member that has not endorsed Sweden’s accession.

US urges China to restrain Houthi rebels as attacks continue in the Red Sea

Tensions continue to rise in the Middle East as the US and UK carried out a round of military strikes in Yemen and Iraq. Both strikes occurred late on Tuesday and targeted sites that are said to be involved in the attacks against US forces in Iraq and Syria, as well as threatening US military and commercial vessels in the Red Sea. The US has urged China to influence Tehran in restraining the Iranian-aligned Houthi rebels responsible for the attacks on these ships. However, there has been little evidence of China applying significant pressure on Iran.

US Social & Political Developments

CIA Director tapped in for fourth round of hostage talks

CIA Director William Burns is set to travel to Europe for the fourth round of multiparty talks aimed at securing the release of over 100 hostages in Gaza, including six US citizens. In November, Burns helped broker the deal that led to a weeklong pause in fighting and the release of more than a 100 hostages held by Hamas. The ongoing negotiations center around the release of hostages in exchange for a cessation of hostilities, a demand presented by Hamas. Israeli Prime Minister Netanyahu has rejected these terms leading to a deadlock.

DeSantis drops out, leaving the Republican presidential primary a two-person race

Florida Governor Ron DeSantis dropped out of the 2024 Republican presidential race on Sunday, just before the New Hampshire primary. While his decision was not surprising, given his 30-point loss in the Iowa primary, he chose to endorse former president Donald Trump over the only other major candidate left in the race, former UN Ambassador Nikki Haley. While this likely gave Haley a bump in the New Hampshire primary, she still lost against Trump by over 10 points. She has vowed to stay in the race, hoping that a strong performance in South Carolina, a state she was previously the governor of, will give her momentum in other primaries.

Corporate/Sector News

US to pause approvals for new LNG export terminals

The Biden administration has paused the approval of new US natural gas export terminals, citing concerns about climate impact and incomplete project analyses. This move aligns with environmentalists but angered industry groups. While praising US gas exports as a weapon against Russia’s use of energy exports as leverage against European countries supporting Ukraine, the administration wants to ensure future projects don’t harm American consumers or the planet. There will likely be delays until after the 2024 election as a thorough study assesses the environmental, economic, and national security implications of these terminals.

Exxon sues climate activist

Energy giant Exxon Mobil has filed a lawsuit against US and Dutch environmentalist investors in a bid to halt them from entering climate-targeted proposals in the company’s shareholder meeting. Exxon claims that their proposals constitutes a “breakdown of the shareholder proposal process,” and that it “does not serve the interests of investors.” The activist investors claimed that investors face economic risks from the effects of climate change, and that they have a right to bring it to the agenda. Analysts believe that the outcome of this case could have significant impact on future shareholder petitions.

Netflix is streaming’s top dog

Netflix’s recent Q4 earnings report sent shares 8.7% higher on Tuesday to $534.80 as the market reacted to the streaming service’s strong results. Paid memberships reached over 13 million in the last quarter of 2024, and it ended the year with over 260 million subscribers – a record for Netflix. Revenue growth beat expectations, and market analysts hailed Netflix’s competitive advantage in maintaining its status in an increasingly crowded streaming service environment. Netflix’s shareholder letter said to expect consolidation in its competitors, as many other streaming services are struggling to stay relevant in the volatile ecosystem.