Weekly Market Update

Author : The BlackSummit Team
Date : August 10, 2024

Global Market News

Global Equities Continue to Decline

Global equities were only slightly lower on the week after gaining ground from Monday’s sharp drop following fresh US economic data that calmed fears of a recession. The Dow Jones and S&P 500 lost 0.60% and 0.04% on the week, respectively, while the Nasdaq lost only 0.18%. The US 10-year Treasury note ticked back up 14 basis points to 3.94%. The price of a barrel of West Texas Intermediate crude oil jumped up more than 4% to end the week at $76.84. Volatility, as measured by the CBOE Volatility Index, ended the week at 20.37 after opening Monday at 55.07.

Japanese Markets Drop More Than 12% In One Day

Japan’s Nikkei and Topix indexes fell more than 12% on Monday, their second-worst day on record, amid panic triggered by US recession fears and a sharp rise in the Japanese yen. Japanese stocks had already been on a downward spiral since the Bank of Japan raised rates to 0.25% from 0.1% last Thursday. Markets rebounded 10% on Tuesday as Bank of Japan officials assured investors it is in no hurry to hike interest rates further given a stronger yen and lower equity prices.

Updated Market Figures

International Developments

Ukraine’s Offensive Against Kursk

In a surprising turn of events, Ukraine has launched a significant incursion into Russian territory, marking the most substantial attack into Russia since the conflict began and potentially upending the status quo. Ukrainian forces, supposedly numbering around 1,000 troops supported by tanks and drones, crossed into the Kursk region, catching Russian defenses off guard. The move has led to intense battles, with Russia declaring a state of emergency and rushing reinforcements to the area.

Bangladesh PM Steps Down Amid Protests

Bangladesh’s Prime Minister Sheikh Hasina resigned and fled the country on August 5th following weeks of intense protests and violent clashes that left nearly 100 people dead. The unrest, initially sparked by student demonstrations against government job quotas, escalated into a broader movement demanding her resignation. Hasina’s departure has plunged the nation into uncertainty, with Nobel laureate Muhammad Yunus stepping in as the head of an interim government. The situation remains volatile, with ongoing violence and a power vacuum that may pose significant challenges for any new administration.

Hamas Promotes New Leader, Renewed Calls for Ceasefire Talks

In a significant development, Hamas has promoted Yahya Sinwar as its new leader following the assassination of Ismail Haniyeh. Experts believe that Sinwar was highly influential in planning the surprise attack on Israel on October 7th, 2023. Amidst this leadership change, the United States, Qatar, and Egypt have issued a joint call for Israel and Hamas to resume ceasefire talks. The three nations have emphasized the urgency of these discussions, scheduled for August 15th in Doha or Cairo, aiming to bridge remaining gaps and implement a ceasefire agreement.

US Social & Political Developments

Walz Chosen as Kalama Harris’ Running Mate

Vice President Kalama Harris officially announced Minnesota Governor Tim Walz as her vice president running mate for the November 2024 presidential election. The selection of Walz came after much speculation about Harris’ potential VP pick, with Pennsylvania Governor Josh Shapiro, Arizona Senator Mark Kelly, and others also said to be in the running. Her campaign highlighted his background as a Midwesterner, a gun owner, and an Army National Guard serviceman. Walz and Harris appeared together in Philadelphia Tuesday, and are scheduled to campaign across the country as the election nears.

Trump and Harris to Debate in September

Former President Donald Trump announced that he had agreed to debate Vice President Kamala Harris on ABC News on September 10th, saying that he hopes “to set the record straight.” Harris confirmed that she would participate and expressed her eagerness to give her case to the American people. Trump had initially agreed to the debate before President Joe Biden had dropped out of the race, which then saw the former president implying he would not debate Harris.

Corporate/Sector News

Trouble for Paramount and Warner Bros. Discovery

Warner Bros. Discovery fell over 10% on Wednesday, driven by a nearly $10B loss for the second quarter, largely due to a huge writedown of the value of its cable networks, as well as a weak US ad market and uncertainty related to certain rights renewals. At the same time, Paramount Global has been hit by an impairment charge of nearly $6B related to the value of its networks. It is also cutting 15% of its US workforce to reach $500M in cost savings, sending PARA shares up 6.4% in premarket trading on Friday, but it ended the day up only 0.88%.

Chevron’s Q2 Earnings and Its Move to Texas

Chevron’s stock fell following the company’s posting of its second quarter earnings, missing expectations due to weaker refining margins and refinery maintenance. The company also announced that it was moving its headquarters to Houston from California, where it has been for over 140 years. CEO Mike Wirth explained the move, claiming that the state of California’s policies raised costs, hurt consumers, and discouraged investment, and that the move was good for the company’s ability to “compete and perform.”

Chile’s Sole Steel Mill Closes Due to Chinese Competition

The closure of Chile’s sole steel mill marks a significant blow to the country’s industrial landscape. The mill, operated by CAP, has been unable to compete with the influx of cheaper Chinese steel imports, which are sold at approximately 40% lower prices. Despite the Chilean government’s efforts to impose harsh tariffs on Chinese steel to protect local industry, the measures proved insufficient. Over the past two years, the mill has incurred losses exceeding $500 million, leading to the decision to shut down operations indefinitely by September. This closure not only impacts the 20,000 direct and indirect jobs associated with the mill but also raises concerns about the broader economic implications for Chile’s steel-dependent sectors, particularly its copper mining industry.

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The EU is banning single-use plastics by 2030

Source: World Economic Forum