26th March – 1st April 2022 | Another week in the markets
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The Russian war shows no signs of slowing down and the global markets remain volatile yet another week.
- Putin demands payments to be made in rouble for Russian gas
- CVS Health Corp. agrees to a $484 million settlement to get out of Opioid trial
- Waymo launches self-driving cars in San Francisco for testing
- Secure Act 2.0 passed to expand tax-free retirement savings
- Global banks’ 1st quarter profits expected to see a dip
Taking stock | Rouble or trouble | Opioid withdrawal | Way, Waymo | Saving retirement | Banking blanks | Invest wisely
US stocks closed the quarter on Thursday with the major indices such as the Dow, S&P 500, and the Nasdaq Composite booking their biggest quarterly loss in two years. However, on Friday, stocks closed near high sessions. The Dow rose by 0.40%, S&P 500 gained 0.34%, and the Nasdaq rose by 0.29%, beginning the second quarter on a positive note. Despite the US Treasury curve briefly inverting on Tuesday, experts believe a recession is unlikely in the next two years. Oil prices this week saw a decline following news that the US was considering releasing 180 million barrels of oil – the largest reserve release.
Rouble or trouble
Putin has signed a decree that requires foreign buyers of Russian gas to make payments in roubles effective from 1st April if they don’t want contracts to be halted. The existing contracts are in euros or dollars and hence western governments and companies consider this a breach. France and Germany are now preparing for the possibility of the Russian gas flow stopping, a scenario that could lead to an energy crisis in Europe, which imports 40% of its gas from Russia.
Here’s a chart to give you an idea of the extent of Europe’s dependence on Russian gas:
On Wednesday, CVS Health Corp., a healthcare services company, entered into a $484 million settlement with the State of Florida. The company agreed to settle all the opioid claims made against it dating back to over a decade and as a result, CVS Pharmacy is no longer a defendant in the opioid lawsuit scheduled for trial later in the month. After the announcement, CVS Health Corp’s stock fell by 1.08% and closed $7.70 below its 52-week high of February. While the overall market ended the day in red on Wednesday, CVS’s stock underperformed the market as well as its competitors.
Waymo, a self-driving technology pioneer and a subsidiary of Alphabet Inc., announced that it has started offering rides to its employees in autonomous or self-driving cars in San Francisco. This is not Waymo’s first time deploying autonomous cars in a city – the company has done this previously in Phoenix. The goal now is to open it to public testing in a major metropolitan area. The rides are currently free and only available to Waymo employees. The company needs two more approvals in California to open this service up to the general public and start charging them for the same.
On Tuesday, the House of Representatives passed a bill for improving the retirement savings system in the US. Secure Act 2.0, has added new 401(k) provisions to support savers achieve their retirement savings goals. The bill’s highlights include increased catch-up contributions and higher ages for the required minimum distribution.
The bill also has a provision for student loan borrowers, allowing employers to match student loan payments as contributions to retirement savings. Another important change is automatic 401(k) and 403(b) enrollment of eligible employees at 3% pretax, which is to increase annually by 1% up to a maximum of 15%.
Profits of the world’s biggest banks are expected to see a sharp drop in the first quarter of this year. The combined profits of banking giants such as JPMorgan Chase, Morgan Stanley, and Citigroup are expected to fall by 2% from the quarter ended December. This will be the first drop in quarter-over-quarter profits in seven quarters. One of the biggest reasons for this dip is a decline in M&A activity along with lower fee revenue and trading losses on account of market volatility.
At a volatile time like this, not losing sight of your overall investment strategy is essential. Instead of making panicked decisions, your focus should be on diversification to lower overall portfolio risk. Download the Appreciate app to access a wide range of US stocks and helpful investing tools.
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