S&P Global —14 August 2024
Daily Update: August 14, 2024
Investors React to a Competitive US Election
By Nathan Hunt
Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy
With 82 days until the US election, markets have been reacting to a presidential race in flux. Different policy proposals from the two major candidates have implications for commodities and equities markets, and some investors are taking positions based on an anticipated outcome. Brian Luke, head of Commodities, Real & Digital Assets, at S&P Dow Jones Indices, has reviewed the historical performance of commodity and equity indexes in the year following elections in an article titled “Drill Baby Drill: Commodity Performance in U.S. Election Years.” While knowing how markets will react to an eventual Donald Trump or Kamala Harris administration is impossible, the historical patterns are interesting to consider.
Luke’s analysis shows that the S&P GSCI, which broadly tracks commodity markets, has historically trended in a positive direction in the 100 days leading up to an election. In elections where a Republican wins, the S&P GSCI rallies 9% before the election, while in elections with a Democratic winner, the index rallies 8.8%. In the year following the election, commodities markets typically perform well, with the S&P GSCI gaining an average 11.2%, although the gain is slightly higher under Republican administrations. The S&P 500 equity index also experiences good average gains in the year after an election but tends to perform slightly better under Democratic administrations.
Digging deeper into the anticipated policy proposals from both major candidates, a range of market outcomes emerges. For example, under a second Trump administration, a big shift in oil sanctions policy appears likely, with a tightening of sanctions on Iran and a loosening of sanctions on Russia. Meanwhile, a Harris administration might look to negotiate a deal with Iran while maintaining pressure on the Russian economy through sanctions.
Harris is likely to continue Biden administration policies that favor renewable energy investments. Her choice of Minnesota Gov. Tim Walz as a running mate seems to indicate that environmental and climate-friendly policies would remain a priority under a new Democratic administration. Meanwhile, the Project 2025 policy blueprint for a second Trump term, produced by the Heritage Foundation, would encourage rollbacks in climate policies and favor traditional fossil fuel interests over renewables.
Markets have appeared to react to Harris replacing President Joe Biden as the Democratic nominee. The S&P GSCI Crude Oil fell 4.3% over the past month — it's still up 16.5% on the year — which may reflect moderating expectations of a Trump victory. On the other hand, the S&P GSCI Gold rose 4.3% over the past month. Gold typically increases in value due to inflationary worries, but whether the increase in the gold index is due to anticipated inflation under a Harris or Trump administration remains unclear.
Today is Wednesday, August 14, 2024, and here is today’s essential intelligence.
Listen: What It Means To Be Green: Steel Market Lacks Consensus On What Low-Carbon Looks Like
"Green steel" is becoming an increasingly desirable product around the world as more end users establish decarbonization goals and legislation like the EU's carbon border adjustment mechanism (CBAM) goes into effect. But with no single definition, steel market participants are having to come up with their own standards as they pursue lower-carbon steelmaking. In this episode, Laura Varriale, managing editor of the ferrous metals team, EMEA, at S&P Global Commodity Insights, and Guido Kerkhoff, management board chairman and CEO of the European unit of German steel service company Klöckner & Co., talk about the state of the European and US green steel markets, challenges and advancements, and how steel trading might be affected by CBAM and the decarbonization drive.
—Listen and subscribe to the podcast from S&P Global Commodity Insights
Few Bank Stocks Post Positive Returns As Recession Fears Spark Sell-Off
Only six US banks posted positive stock price returns for the week ended Aug. 7, as markets reeled in the wake of a disappointing jobs report. The industry underperformed relative to the broader market during the period, with the KBW Nasdaq Bank Index falling 9.0% compared to a 5.8% decline for the S&P 500, according to S&P Global Market Intelligence data. The underperformance followed a lackluster jobs report from the Bureau of Labor Statistics that reignited recession fears among investors.
—Read the article from S&P Global Market Intelligence
Global Private Equity Deal Value Climbs In July As M&A Market Thaws
Global private equity and venture capital deal value is on the rise this year, even in the face of investor concerns about interest rates and a possible US recession. In the year to July 31, global deal value amounted to $369.51 billion, a 26% increase from the same period in 2023, according to S&P Global Market Intelligence data. The number of deals during the measured period were down to 7,237 from the 7,657 reported a year earlier.
—Read the article from S&P Global Market Intelligence
Saudi Aramco Allocates Full Sep Crude Term Supply To Asian Refiners
Saudi Aramco has allocated full term volumes to Asian refiners for September-loading crude supply, Asian traders and end-users said Aug. 12, while volumes to Asia's largest crude importer, China, were seen easing on the month. Aramco could not be immediately reached for an official comment. In China, total Saudi crude allocations for September were heard at around 43 million barrels, down from the 43 million-47 million barrels range previously reported for August-loading cargoes.
—Read the article from S&P Global Commodity Insights
Libyan Oil Minister Charged With Corruption
Libya's attorney general has ordered the detention of oil minister Khalifa Rajab Abdulsadek on corruption charges, potentially ending a period of dysfunction during which two people were simultaneously holding the role. In a statement, the Attorney General's Office alleged that the oil minister of the internationally recognized government in Tripoli had illegally threatened an accounting officer to force him to "approve a document authorizing the disposal of 457,000 euros and 600,000 euros for the benefit of a foreign company".
—Read the article from S&P Global Commodity Insights
One-Third Of Americans Use Three Or More Financial Apps
Eight in 10 Americans have embraced the digital economy by using financial apps for everything from online purchases and digital payments to mobile banking and more, according to S&P Global Market Intelligence Kagan's recent survey. Of particular note is the strong competition for all that consumer spending. In the latest 2024 US Consumer Insights survey, overall use of financial apps was flat year over year at 83%. Two-thirds of Americans use PayPal, the dominant financial app in the market.
—Read the article from S&P Global Market Intelligence
Beyond ESG With Scaling Capital For The Energy Transition (Aug. 21, 2024)
Clean tech is key to scaling the energy transition, but its adoption remains stifled by the deployment of fossil fuel infrastructure far from the end of its economically useful life. How can investors and companies finance this shift, while the threat of early retirement of assets still looms large?
—Register for the webinar from S&P Global Sustainable1