Global markets ended lower this week weighed down by flagging demand from China, shrinking British GDP and contraction of German exports. The U.S. Dollar gained due to rate cuts by multiple central banks during the week and depreciation of currencies within the Emerging Nations’ bloc. Google announced a revolutionary quantum-computing chip and Apple introduced Siri’s integration with OpenAI. In geopolitical developments, the South Korean parliament prepared to vote on President Yoon Suk Yeol’s impeachment, after the current president declared martial law to crackdown on the rising number of ‘anti-nationalist’ incidents in the country. Syrian president Bashar Al-Assad fled to Russia after rebels took over Damascus, the capital of the country.

Global Updates
  • The MSCI All Country World Index dipped this week in the absence of tangible action from China following the stimulus pledges in the politburo meeting. The Swiss National Bank and Bank of Canada eased rates by 50 bps, while the European Central Bank eased by 25 bps. These rate cuts and the reluctance of Bank of Japan to raise rates strengthened the U.S. Dollar over the week. 
  • German exports dropped more than expected by 2.8% month-over-month to a 3-year low of €124.6 billion in October. The United Kingdom’s GDP also contracted by 0.1% in October weighed down by decline in manufacturing of pharmaceuticals, machinery and chemicals. 
  • The Chinese Yuan depreciated amid reports of Chinese authorities considering the strategic devaluation of the currency to counter the trade risks from increased tariffs projected by president elect Donald Trump.
  • Oil prices rose during the week driven by supply bottlenecks due to prospects of tighter sanctions on Russia and Iran.
  • The Brazilian senate approved an energy bill regulating offshore wind energy infrastructure and incentives for fossil fuels.
U.S. Equity
  • The S&P 500 & Dow Jones indices dipped this week while the markets digested a higher than anticipated wholesale price inflation in November and a rise in jobless claims. 
  • U.S. unemployment claims also rose to 242,000 in the previous week, the highest in two months. Wholesale prices rose by 0.4% month-on-month in November, double the anticipated inflation of 0.2%. Consumer price inflation came in at 2.7% for November, in line with expectations.
  • The AI rally following Alphabet’s announcement of a breakthrough in its quantum-computing chip, Willow, drove the NASDAQ index across the 20,000 benchmark for the first time. 
  • Adobe’s stock dragged after the company released a downbeat full-year revenue projection between $23.30 and $23.55 billion, due to delayed returns from investments in the development of AI driven software tools.
  • Broadcom stock surged due to a higher than anticipated net profits of $4.32 billion for the fourth fiscal quarter. The company raised the projected revenue for the first quarter to $14.6 billion and the fiscal 2027 revenue to the $60 billion to $90 billion range. Investors were also enthused by reports of a Broadcom-Apple project to develop the first server chip for artificial intelligence. 
  • Michael Hartnett, a Bank of America strategist, warned investors of froth building up in U.S. cryptocurrency and stock markets from the significant rallies over the year. Meanwhile, Oppenheimer Asset Management also projected the S&P 500 index to reach the 7,100 mark by the year ending 2025.
  • Advertising firm Omnicom Group arrived at a $13.25 billion agreement to acquire Interpublic Group in a stock-for-stock deal.
  • Apple launched the new OpenAI-integrated version of Siri. Apple Intelligence integration with other apps will be launched in the coming year. Apple also announced a collaboration with Broadcom to develop an AI chip called Baltra. 
  • Nippon Steel’s acquisition of U.S. Steel is in jeopardy as US President Joe Biden plans to block the sale, citing national security reasons. The Committee on Foreign Investment in the United States will table its findings by the end of the month. 
  • Elon Musk’s company SpaceX achieved a valuation of $350 billion during an insider share deal.
  • General Motors is planning to defund its Cruise robotaxi project, due to losses and higher than expected costs.
Fixed Income
  • The Bloomberg U.S. Aggregate Bond Index dragged this week.
  • The U.S. 10-year Treasury yield rose to 4.32% and the yield on the 2-year note rose up to 4.19% over the week driven by concerns of rising inflation.
  • The U.S. Dollar Index jumped to 107.1 this week.

HCM-030624-063.GWS