Weekly Market Update

Author : The BlackSummit Team
Date : November 9, 2024

Global Market News

Global Equities Make Gains

Global equities were substantially higher on the week following Donald Trump’s election win as investors anticipate pro-growth policies in a second Trump administration. The Dow Jones and S&P 500 rose 4.61% and 4.66%, respectively, while the Nasdaq surged 5.74%. Post-election, the US 10-year Treasury note surged to 4.50% but has settled back to 4.30% to end the week. The price of a barrel of West Texas Intermediate crude oil rose moderately to close Friday at $70.42. Volatility, as measured by the CBOE Volatility Index, declined significantly over the week to 14.94.

Updated Market Figures

The Fed Cuts Rates

The US Federal Reserve cut rates again, lowering the funds rate by a quarter-point to 4.50-4.75%. The move was expected but some uncertainty remains on how Chair Jerome Powell will address the stronger-than-expected economic growth that could complicate the central bank’s goal to bring inflation below 2%. There have been rumors that President-elect Donald Trump would like to replace Powell but CNN reported this week that Trump will likely allow him to serve out his term which ends in May 2006. In the press conference on Thursday, Powell said he would not step down as Fed chair if asked by Trump.

International Developments

European Officials Meet in Hungary to Discuss the Return of Trump

Following Donald Trump’s victory in the US presidential election on November 7th, approximately 50 European leaders convened in Budapest, Hungary for the European Political Community summit to discuss a unified response to his return to power. While some leaders, such as French President Emmanuel Macron, emphasized the need for European unity and autonomy in the face of potential challenges from the new Trump administration, Hungarian Prime Minister Viktor Orban celebrated Trump’s win as a victory for populism and expressed support for a negotiated settlement in the Ukraine war, a stance at odds with Ukrainian President Volodymyr Zelensky, who was also present at the summit. European policymakers are concerned about the potential for a trade war with the US, reduced American support for Ukraine, and the impact of Trump’s policies on the transatlantic alliance, especially given the recent collapse of the German coalition government, which has left Europe’s largest economy in a state of political paralysis. Some European officials hope to persuade Trump to engage in multilateral negotiations and avoid imposing tariffs by praising his past contributions to NATO, such as encouraging member states to increase defense spending.

China Approves $1.4T in Plan to Strengthen Struggling Economy

This week, China approved a 10 trillion yuan ($1.4 trillion) plan to bolster its struggling economy. This plan will allow local governments to refinance their debt over three years, replacing “hidden debt” owed by local government financing platforms with borrowing capped at 6 trillion yuan ($838 billion). Additionally, local governments will have access to a separate 4 trillion yuan ($558 billion) quota in special local bonds over five years, also aimed at reducing their debt holdings. This announcement follows a period of economic difficulty for China, with GDP growing by only 4.6% in the third quarter of 2024.

Netanyahu Fires Defense Minister, Continues Campaign in Lebanon

On November 5th, Israeli Prime Minister Benjamin Netanyahu dismissed his Defense Minister, Yoav Gallant, amidst ongoing wars in Gaza and Lebanon. Netanyahu cited a “crisis of trust” with Gallant, stemming from disagreements over the handling of the war in Gaza and Gallant’s decision to send draft notices to young ultra-Orthodox men, a move opposed by Netanyahu’s ultra-Orthodox coalition partners. Gallant had advocated for a more diplomatic approach to the Gaza war, aiming to secure the release of Israeli hostages held by Hamas, while Netanyahu favored continued military pressure. The firing prompted widespread protests across Israel, with thousands gathering in Tel Aviv and Jerusalem to condemn Netanyahu’s decision. In Lebanon, Israeli ground troops are engaged in a month-long invasion against Hezbollah militants, with over 3,100 people killed and 13,800 wounded in the country since Hezbollah began firing on Israeli territory on October 8th, 2023. This escalation also involves Israeli airstrikes targeting Beirut’s southern suburbs, including a site near Lebanon’s only international airport that the Israeli military claimed housed Hezbollah facilities.

U.S. Social and Political Developments

Trump Wins Decisively in US Presidential Election

Donald Trump won the 2024 US presidential election on November 6th, defeating Vice President Kamala Harris and reclaiming the White House after losing it in 2020. Trump, who will be the 47th president, is the second candidate in US history to win nonconsecutive White House terms. Trump’s victory was decisive, as he swept the battleground states, took the lead in the popular vote, and outperformed his previous support among young people and some minority groups. Trump will be inaugurated on January 20, 2025, and will serve alongside his running mate, Senator JD Vance.

Republicans Secure Senate Majority, On Track for the House

As of November 8th, Republicans have already secured a 53-seat majority in the US Senate. However, two U.S. Senate races remain uncalled, with Democrats favored to win both. In Nevada, incumbent Democratic Senator Jacky Rosen leads GOP nominee Sam Brown by approximately 17,000 votes or slightly over one percentage point. In Arizona, Democratic Representative Ruben Gallego holds a lead of nearly 44,000 votes over Republican nominee Kari Lake, with an estimated 76 percent of the vote counted. Additionally, there are 25 uncalled House races, with Republicans currently holding 211 called seats and Democrats holding 199. Control of the House hinges on the outcomes of several tight races, including Maine’s 2nd, Washington’s 3rd, Arizona’s 6th, and California’s 47th.

Corporate/Sector News

Steven Madden Decides to Move Production out of China with Return of Trump

Steven Madden CEO Edward Rosenfeld announced that the company would accelerate its plans to move nearly half of its production out of China within the next year. This decision was made in anticipation of Trump imposing tariffs on Chinese goods, a policy he had implemented during his first term and promised to continue during his campaign in his next term. While more than 70% of Steven Madden’s US imports currently come from China, the company aims to reduce that number to 25% within a year. Steven Madden has been working to build up a factory base in countries such as Cambodia, Vietnam, Brazil, and Mexico, though experts note that completely disentangling supply chains from China is a difficult and complex process.

Nissan Plans to Cut 9k Jobs and to Halve CEO’s Pay

Nissan Motor announced plans to cut 9,000 jobs and reduce its global production capacity by 20%. This decision comes after Nissan reported a 90% drop in operating profit for the first half of its fiscal year, with profits falling to $214 million during the April-to-September period. Nissan CEO Makoto Uchida acknowledged the company’s struggles to meet consumer demand in key markets like China and the United States, particularly in the growing hybrid and electric vehicle sectors. To address these challenges, Uchida will take a 50% pay cut, and the company will use resources freed up by cost reductions to bolster its electric vehicle offerings in China and hybrid options in the United States, leveraging partnerships such as its recent tie-up with Honda.

Australian PM Plans to Ban Social Media for Citizens 16 and Under, Canada Orders Tik Tok to Shut down its Offices in Country

Australian Prime Minister Anthony Albanese announced a plan to ban social media for children under 16, citing concerns about harm to children. The proposed legislation would require social media companies, including Instagram, TikTok, Facebook, X, and YouTube, to implement age verification processes and would impose fines on companies that fail to prevent underage users from accessing their platforms. This announcement has been met with criticism from some experts who argue that a ban is too restrictive and that parental consent and app store age verification would be more effective solutions. Separately, on the same day, Canada ordered TikTok to shut down its offices in Vancouver and Toronto following a security review that identified risks related to the app’s Chinese ownership. While Canadian users will still be able to use the app, TikTok plans to challenge the order in court.

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