Global Markets rose marginally this week. U.S. markets reversed initial gains this week, due to higher unemployment numbers and sticky inflation. The Federal Reserve is now expected to keep rates unchanged in its November meeting.  Markets were cautious on Chinese stocks, as investors awaited further clarity by China’s ministry of finance on the stimulus measures indicated in September. Chinese stocks declined with profit-taking, even as the Chinese markets reopened. The escalation in Iran-Israel rhetoric pushed up oil prices once again. Hurricane Milton continued to wreak havoc in the U.S. in the wake of damage caused by the hurricane Helene.

Global Updates
  • The MSCI All Country World Index marginally rose this week.
  • The UK’s economy registered a 0.2% growth in August, following the absence of growth in June and July, due to rising industrial production and gains in services. The gains were largely offset by the decline in the Energy sector.
  • Canada recorded a larger-than-expected trade deficit of $806 million in August, its sixth consecutive monthly shortfall, as imports rose while exports declined
  • Europe based investment trust Tritax EuroBox, has agreed to sell its logistics business to the Canadian asset management company Brookfield Global Asset Management for $728 million.
  • Nihon Hidankyo, the Japanese atomic bomb survivors’ group, won the 2024 Nobel Peace Prize for its efforts to achieve a world free of nuclear weapons.
  • The escalation in Iran-Israel rhetoric pushed up oil futures, which had started cooling due to the delay in Israel’s expected retaliation to Iran’s missile attack.
  • The Washington Supreme Court has agreed to review the decision by a state appeals court in a school contamination case against Bayer’s Monsanto, which had earlier cleared the company.   
  • Anglo-Dutch company Unilever has exited the Russian market and sold its existing Russian business to the Arnest Group.
  • Hurricane Milton could cost insurers between $30 billion and $60 billion. But this revised estimate is much lower than the $100 billion forecasted damage earlier this week, before the storm’s arrival on Wednesday evening.
U.S. Equity
  • The S&P 500,  Dow Jones index & Nasdaq indices rallied this week driven by high third quarter profit estimates reported by seven companies including Eli Lilly, Allstate and Zebra Technologies. Markets retreated from the record highs in response to the release of sticky inflation data later in the week. 
  • U.S. consumer inflation remained sticky in September, disappointing market and policymakers. Annual inflation slowed to 2.4% and month on month inflation was in line at 0.2%. Both measures were higher than expected.  The decline in energy and shelter prices was offset by higher food and transportation prices. U.S. factory gate prices inflation was 0.1% month-on month in September, declining from the 0.2% in August.
  • U.S. initial jobless claims rose by 33,000 new claims to 258,000 claims in the last week, surpassing expectations. 
  • The Fed’s September meeting minutes showed a “substantial majority” of officials supported an outsized half-point rate cut. However, there was broader agreement that the move would not commit the Fed to any particular pace of cuts in the future.
  • Advanced Micro Devices (AMD) shares lagged as they were unable to convince investors that its new AI chips can compete with Nvidia. Micron Technology shares gained as it could engineer higher memory in the use of its High Bandwidth Memory (HBM) components in AMD’s new AI chips.
  • RBC Capital identified CrowdStrike as one of its top software stocks with growth potential. CrowdStrike Holdings stocks gained from this announcement after struggling with the fallout from a global systems crash caused by the company’s update.
  • Amazon has expanded the reach of its same-day pharmacy delivery business to twenty new cities.
Fixed Income
  • The Bloomberg U.S. Aggregate Bond Index dipped marginally this week.
  • The U.S. 10-year Treasury yield  rose to 4.06% and the yield on the 2-year note edged up to 3.97% over the week.  The premium on the 10-year note turned positive this week driven by election uncertainty and low probability of aggressive rate cuts by the Fed.
  • The U.S. Dollar Index rose marginally to 102.93 this week.
Sources

HCM-030624-063.GWS