Weekly Market Update

Author : The BlackSummit Team
Date : May 11, 2024

The BlackSummit Team

Global Equities Gain

Global equities made gains this week. The S&P 500 rose 1.85% while the Dow Jones and Nasdaq increased 2.16% and 1.14%, respectively. The US 10-year Treasury note held steady at 4.50% while the price of a barrel of West Texas Intermediate crude oil was nearly unchanged on the week, closing Friday at $78.26. Volatility, as measured by the CBOE Volatility Index, continued its downward trend to 12.55.

Sweden Eases Monetary Policy

Sweden’s central bank, the Riksbank, lowered its policy rate by 0.25%, bringing its rate to 3.75%. Sweden’s move to ease monetary policy follows in the footsteps of a few other European countries, including Switzerland, Hungary, and the Czech Republic. While the US Federal Reserve is still waiting to lower rates, the European Central Bank (ECB) may soon be cutting rates as growth has slowed and unemployment rises across the bloc. ECB President Christine Lagarde reiterated last month that the bank’s decision will not be based on when the US decides to ease; “I have said we are data dependent, we are not Fed dependent.”

International Developments

Senior Philippine Official Calls for Expulsion of Chinese Diplomats

The Philippines’ national security adviser is urging the expulsion of Chinese diplomats following an alleged leak of a phone conversation with a Filipino military official amidst escalating territorial tensions. This comes after China’s recent harassment of a Filipino humanitarian mission at Scarborough Shoal, bringing the tally of maritime incidents instigated by Beijing to three. The leaked conversation purportedly shows a Filipino admiral agreeing to concessions with China over the South China Sea dispute, sparking diplomatic controversy. Despite previous agreements to improve communications, relations between the two countries continue to deteriorate, with the Philippines arguing that China is violating its sovereignty.

Gaza Temporary Cease-Fire Talks End Without Deal

Temporary ceasefire talks between Israel and Hamas ended without an agreement, with Israel escalating attacks in Rafah and Gaza City. Approximately 110,000 Palestinians fled Rafah as Israeli forces intensified their operations, causing humanitarian aid shortages. Despite international pressure, including warnings from the UN and the US, Israel continues its offensive in Rafah, with Prime Minister Benjamin Netanyahu expressing determination to persist. Specifically, President Biden warned Israel that it would stop the shipment of some weapon supplies if the Israel Defense Forces (IDF) carried out a ground assault on Rafah.

Military Leader Déby Declared Victor of Presidential Election Amid Claims of Vote Rigging

Chad’s army and security forces were seen deployed heavily across the capital of N’Djamena following General Mahamat Idriss Deby Itno’s election as president, with armored vehicles and troops seen in a number of major districts and junctions. Despite Prime Minister Succes Masra’s earlier claim of victory, Deby secured over 61 percent of the vote, prompting concerns of rigged results. The election, ending three years of military rule, solidifies dynastic leadership under the Deby clan in Chad, a country pivotal in the Sahel region’s fight against extremism.

U.S. Social and Political Developments

Biden Administration Prepares Tariffs on Chinese EVs, Green Tech

The Biden administration plans to increase tariffs on Chinese clean-energy goods, including electric vehicles (EVs), with the tariffs on Chinese EVs expected to quadruple to 100%. The decision follows a yearslong review of tariffs imposed by the Trump administration and aims to protect the American clean energy industry from Chinese competition. The move comes amidst tensions between the two countries, with China’s focus on clean energy production seen as a threat to US goals of reducing carbon emissions and developing independent clean-energy industries. The tariffs also come during an election year when Biden’s opponent, former President Trump, has already announced that he was considering imposing 60% tariffs on all Chinese imports if elected, escalating the trade war he began.

Democrats Save Republican Speaker Johnson

The House overwhelmingly rejected Representative Marjorie Taylor Greene’s attempt to oust Speaker Mike Johnson, with Democrats aiding Johnson and preventing the motion from proceeding. Greene’s move, spurred by her accusations of Johnson’s cooperation with Democrats, faced broad bipartisan opposition, marking another episode in the GOP’s internal strife. Despite some Republican dissent, Johnson retained strong support, and Trump, while praising Greene’s spirit, opposed her efforts, emphasizing the party’s need for unity ahead of the upcoming elections. The vote was 359-42 to table, or set aside the motion made by Greene, with seven representees voting present.

Corporate Sector News

TikTok Sues US Government Over Potential Ban

TikTok and its Chinese parent company, ByteDance, filed a lawsuit against the US government, challenging a new law requiring the sale of TikTok or facing a ban, arguing that it violates users’ First Amendment rights. The lawsuit comes amid concerns over national security and free speech, with TikTok arguing that divestiture is not feasible within the 270-day allotted period and would essentially lead to a shutdown of the platform. The legal battle, likely to reach the Supreme Court, raises questions about the balance between national security concerns and free speech rights. According to the company, the act will force the shutdown of TikTok by January 19th, 2025, affecting some 170 million users in the US.

Amazon Introduces First Fleet of Electric Trucks for Ocean Freight in Port of Los Angeles

Amazon introduced the first of twelve Volvo electric semi-trucks to pick up cargo from the port of Los Angeles, the nation’s busiest container seaport, which is aiming to meet zero-emissions mandates by 2035. This move extends Amazon’s electric vehicle initiatives from ports to doorstep deliveries, crucial for its goal of achieving net-zero carbon emissions by 2040. The transition to electric semi-trucks poses challenges, including the need for intensive charging infrastructure, with efforts underway to build high-speed charging depots to support the shift. As it stands, only 1% of 23,761 trucks that serve the port are zero-emission vehicles.

Boeing Starliner Mission Launch Delayed

Boeing’s Starliner spacecraft’s first crewed mission faces a delay of over a week due to a valve issue discovered during launch preparations. The next launch opportunity is scheduled for 6:16 pm Eastern Time on May 17th, after engineers identified a problem with a valve on the rocket’s second stage, prompting a thorough review and the decision to replace the valve. Despite the setback, this mission is crucial for Boeing’s Starliner to potentially join SpaceX’s Crew Dragon in NASA’s Commercial Crew Program, facilitating routine operations to the International Space Station and marking a significant milestone in US crewed spaceflight history. Additional checks and other functional checkouts will be conducted at the Vertical Integration Facility at Cape Canaveral Space Force Station in Florida, while the valve is replaced.