Weekly Market Update
Weekly Market Update
-
Author : The BlackSummit Team
Date : May 4, 2024
Global Market News
Global Equities
Global equities made gains this week as fears of a rate hike subsided and US payrolls came in softer-than-expected. The S&P 500 rose 0.55% while the Dow Jones and Nasdaq increased 1.14% and 1.43%, respectively. The US 10-year Treasury note declined over the week, closing Friday at 4.50%. The price of a barrel of West Texas Intermediate crude oil dropped more than 6% to $78.12. Volatility, as measured by the CBOE Volatility Index, continued its downward trend to 13.39.
Bank of Japan intervenes to stop the yen’s slide
The Bank of Japan (BoJ) intervened several times this week in an effort to stop its currency’s slide. The yen fell to a 34-year low, hitting 160.17 versus the US dollar, and only recovered to 152.35 after authorities purchased nearly $60 billion worth of yen on foreign exchange markets. The central bank is exploring ways to prompt companies to purchase yen to further stabilize the currency. While Japan has substantial US dollar-denominated currency reserves, selling these could send US yields higher, widening the interest rate differential between the yen and the dollar.
International Developments
Mass protests continue in Georgia over foreign agent bill
The Georgian Parliament is currently in the process of passing a foreign agent bill that mirrors a similar 2012 Russian bill that aimed to suppress advocacy groups and media agencies critical of the Kremlin. The Georgian draft law requires organizations earning more than 20% of their funding from abroad to register with the state as an organization carrying the interest of a foreign power. Mass protests erupted in mid-April as a result of the bill and fears that it could derail Georgia’s EU membership bid. The bill requires a third and final vote by Parliament that is expected to take place in mid-May, according to a Georgian lawmaker.
Blinken pressures Israel on ceasefire
Secretary of State Antony Blinken visited Israel on Wednesday to pressure Israeli senior officials, primarily Prime Minister Benjamin Netanyahu, into accepting a temporary ceasefire deal in the Gaza Strip. The latest ceasefire proposal includes a to-be-determined weekslong truce and the release of hostages on both sides. On Thursday, a Hamas leader said that the group would send a delegation to Cairo to complete ongoing discussions in regards to a ceasefire. However, Israel has warned Hamas that if a ceasefire and hostage exchange deal is not made within a week it will commence a ‘military operation’ in Rafah. Senior Israeli officials have also been contemplating a plan for postwar Gaza that would include shared oversight of the territory with several Arab countries and the United States, but the proposed Arab countries and far-right members of Netanyahu’s coalition are unlikely to accept the plan.
Gazprom posts first annual loss, Russia looks to North Korea
Russia’s state-owned Gazprom posted a $6.84 billion loss as compared to its earnings in 2022, representing its first annual loss since 1999. The primary drivers of the decline were restrictions placed by Europe, Gazprom’s biggest market, on gas flows after the Russian invasion of Ukraine in 2022 as well as the low demand but high gas supply. Looking to compensate for the European market, Russia has looked to other partners like North Korea, which can also provide Russia with essential military supplies to fight Ukraine. According to the White House, Russia is exceeding the annual 500,000-barrel global gap placed on North Korea by the United Nations. In March alone, Russia shipped 165,000 barrels of refined petroleum to North Korea.
US Social & Political Developments
Pro-Palestine campus protests met with police crackdowns amid graduations
As of May 3rd, more than 2,300 students nationwide have been arrested as police have been called in by universities to respond to protests against Israel’s war in Gaza. At Columbia University, New York Mayor Eric Adams has claimed that outside agitators were co-opting the student-led movement that began there and has since spread across the nation. As crackdowns continue, many universities are grappling with how to handle graduation ceremonies. The University of Southern California has chosen to cancel its graduation, citing security threats, while other schools are choosing to hire extra security, physically screen graduation attendees, and stress that major disruptions from pro-Palestinian protestors will not be tolerated.
US and Mexico bilateral cooperation to address illegal migration
US President Joe Biden and Mexican President Andres Manuel Lopez Obrador (AMLO) issued a joint statement on Monday stating that they had discussed how to more effectively and efficiently manage illegal migration at the border. Both leaders have ordered their national security teams to work together to reduce irregular border crossings, while still emphasizing the need to protect human rights. In the US, illegal migration is a top concern among voters heading into presidential elections in the fall. US Border Patrol detentions dropped from a monthly record of 250,000 migrants in December to 137,000 migrants in March, largely due to increased enforcement efforts by Mexico.
Corporate/Sector News
Musk’s trip to China results in Tesla partnership with Baidu
Tesla reportedly has reached a deal with Baidu which will allow the electronic car manufacturer access to the company’s mapping license for data collection on Chinese roads as well as its lane-level navigation system. The deal was made after Tesla CEO Elon Musk visited China to meet with Chinese senior officials, including Chinese Premier Li Qiang. News of the agreement pushed Tesla shares up by 8% before trading on Monday. The agreement was necessary for Tesla as China requires all driving assistance systems to have a mapping service license before operating on public roads. Foreign firms like Tesla must partner with one of the 12 licensed domestic firms— Baidu is one of those firms.
Exxon poised to acquire Pioneer; Skydance-Paramount merger runs into difficulties
The Federal Trade Commission is seemingly poised to approve ExxonMobil’s $60 billion purchase of Pioneer Natural Resources after the two companies agreed to minor concessions. The decision could come as soon as a few days and would make Exxon the most dominant producer of oil in the Permian Basin, allowing the energy giant to control 15% of gross oil production in the region. In other merger and acquisition news, Skydance Media has reportedly made its best and final offer in a bid to merge with Paramount Global, despite Paramount shareholders opposing the proposed merger. Former CEO Bob Bakish parted ways with Paramount on Monday, prompting the company to announce that it will now have an ‘office of CEO’ composed of its top three executives.
G7 countries reach agreement to phase out unabated coal by 2035
On Tuesday, ministers from the G7 nations agreed to end the use of unabated coal-fired plants by 2035 after negotiations in Turin, Italy. However, the agreement allows coal-dependent countries to breach the deadline— namely Japan and Germany. Unabated coal means coal that is burned with the capture of carbon emitted, allowing countries to continue to use the goal to generate electricity if coal plants utilize carbon-capture technology. The agreement comes after several years of talks between the G7 countries on phasing out coal and could be a model replicated elsewhere in the world, especially by China and India— the world’s two largest coal power consumers.
Recommended Reads
G7 pact to stop using coal by 2035 sets up next battle over gas supplies
Javier Milei Sparks Wild Rally That Makes Peso No. 1 in World
A Brief History of the Fed’s Uneasy Peace With the White House
We risk a lost decade for the world’s poor
This week from BlackSummit
The BlackSummit Team
The BlackSummit Team
Image of the Week
Video of the Week
Why the South China Sea Could Spark a War
Bloomberg
