Global Equities Decline

Global equities declined on the week as volatility soared. The Dow Jones and S&P 500 dropped 2.93% and 4.25% on the week, respectively, while the Nasdaq lost 5.77%. The US 10-year Treasury note fell to end the week at 3.71%, and the price of a barrel of West Texas Intermediate crude oil decreased close to 8%, ending the week at $67.67. Volatility, as measured by the CBOE Volatility Index, rose 45% over the last 5 days, closing Friday at 22.38.

Crude Oil Under Pressure Despite OPEC+ Output Delays

In the face of downward pressure on crude oil prices, OPEC+ decided this week to delay its output increase planned for October by 2 months. Despite the move, crude prices still fell below the $70 mark amid slumping demand in China and concerns that the US economy is slowing faster than expected. An end to a dispute that had halted Libyan oil exports also added pressure to prices. Crude oil prices are at their lowest point this year.

Updated Market Figures

International Developments

Japanese PM Visits Seoul to Build on Improved Relationship with South Korea

Japanese Prime Minister Fumio Kishida and South Korean President Yoon Suk Yeol met in Seoul this week to reinforce the recent improvement in relations between their countries. The leaders emphasized the importance of maintaining momentum in their partnership, despite imminent leadership changes in Japan and the US. They agreed on several initiatives, including facilitating the evacuation of citizens from third countries in emergencies and simplifying immigration procedures. Kishida, set to step down later this month, expressed hope that the progress made would continue under his successor.

AfD Secures First Far-Right Win in German State Elections Since Nazi Rule

The far-right AfD party secured a historic win, gaining about one-third of the votes in Thuringia and Saxony during German state elections, marking the first time a far-right party has won since Nazi rule. Despite their victory, coalition formation remains challenging, with the conservative CDU ruling out any collaboration, and the leftist Sahra Wagenknecht Alliance (BSW) also refusing to work with the AfD. The AfD’s success is driven by safety concerns, such as knife crimes, and reflects a broader rise in right-wing populism across Europe. Meanwhile, other political parties may adopt stricter policies to regain voter support.

India and Singapore Agree to Cooperate on Semiconductors

Lawrence Wong signed a Memorandum of Understanding (MoU) to cooperate on semiconductors, strengthening supply chain resilience and workforce development. Singapore, which accounts for 11% of the global semiconductor market, aims to deepen its role in India’s growing market, which is projected to reach $63 billion by 2026. The deal is part of India’s broader $10 billion initiative to boost its semiconductor industry, with plans for three new plants worth over $15 billion. Indian Prime Minister Narendra Modi also met Singapore’s President Tharman Shanmugaratnam, and additional agreements were signed on digital technologies, education, and health.

US Social & Political Developments

The Biden Administration Announces Actions Against Enablers of Russian Disinformation Campaign Ahead of US Elections

On September 4^th, the Biden administration announced actions to counter Russian interference in the 2024 US election, including criminal charges against two Russians, sanctions on 10 individuals and entities, and the seizure of 32 internet domains. Russian President Vladimir Putin allegedly directed three companies, including Social Design Agency, to promote disinformation supporting Donald Trump or the Republican nominee. Two RT employees were indicted for funneling $10 million to a Tennessee-based front company aimed at influencing American voters. This marks one of the administration’s largest public responses to foreign election interference.

Trump Proposes a Government Efficiency Panel Headed by Elon Musk Among Other Economic Measures

During his speech at the New York Economic Club on September 5th, Donald Trump proposed several new economic measures. He suggested creating a sovereign wealth fund to finance infrastructure projects using tariffs and other unspecified methods. Trump also pledged to reduce the corporate tax rate to 15% for US-based manufacturers and proposed eliminating taxes on income from tips. Additionally, he introduced plans to appoint Elon Musk as head of a government efficiency panel, issue a national emergency to boost energy supply, ban mortgages for undocumented migrants, and open federal land for large-scale housing construction with special tax and regulatory incentives.

Corporate/Sector News

Biden Expected to Block Nippon Steel’s $14.9B Acquisition of US Steel

President Joe Biden is expected to block Nippon Steel’s proposed $14.9 billion acquisition of US Steel, citing concerns over national security and the preservation of American manufacturing. US Steel executives argue that the deal’s failure could threaten thousands of union jobs at the company’s headquarters in Pittsburgh, PA, a key swing state for the upcoming election. The deal is under review by the Committee on Foreign Investment in the United States (CFIUS), but no official recommendation has been made yet. Nippon Steel, a major global steel producer, insists that its investment would strengthen the American steel industry without posing any security risks. In a speech on September 2^nd, the Democratic Presidential Nominee and current Vice President Kamala Harris voiced her opposition to the deal stating that US steel should remain American-owned and American-operated.

Brazilian Supreme Court Blocks Elon Musk’s X

Elon Musk’s social media platform X was banned in Brazil following a legal clash with Supreme Court Justice Alexandre de Moraes, who imposed a $9,000 daily fine for VPN users bypassing the suspension. In response, many Brazilians migrated to alternative platforms like Threads and Bluesky, with Bluesky gaining 2.6 million new users, 85% of whom were Brazilian. Brazil’s President Lula da Silva and other public figures joined these platforms which now serve as the new space for newsmakers and political discourse. X, previously home to 22 million users in Brazil, had outsized influence among journalists, politicians, and celebrities despite being less popular than other social media platforms like TikTok, Instagram, and Facebook.

Volkswagen Considering a Historic Move to Shutdown Plants in Germany for the First Time

Volkswagen (VW) is considering closing one vehicle plant and one component factory in Germany due to cost pressures from Asian competitors which would be its first potential plant closures in the country. The move has triggered strong opposition from the works council and IG Metall union which promises “fierce resistance” to the plans, especially regarding job security protections in place until 2029. VW aims to save €10 billion by 2026 as part of a broader cost-cutting drive, with Chief Financial Officer Arno Antlitz and brand chief Thomas Schaefer addressing staff in an upcoming works council meeting. Analysts have identified possible closure targets in Osnabrück and Dresden, and the decision highlights broader economic challenges facing Germany’s industrial sector.

Recommended Reads

The Other Proliferation

Why Sudan’s catastrophic war is the world’s problem  

The kleptocrats aren’t just stealing money. They’re stealing democracy 

Europe’s Populist Surge Isn’t Only About Immigration, It Is About Fading Trust

How open trade saved us from a global food crisis 

This week from BlackSummit

Geopolitics & the Day After

The BlackSummit Team

Image of the Week

Video of the Week

Watch How Nvidia Changed the Game

Source: Bloomberg