US benchmark equity averages rose on Friday as the market ended a three-day losing streak. 

At the time of writing, the Dow Jones Industrial Average was up 0.3%, while S&P 500 rose 0.8% from the previous close.

The Nasdaq Composite gained more than 1.3% on Friday. 

Nasdaq and S&P 500 ended in the green on Thursday buoyed by positive earnings results of Tesla and as Treasury yields fell in the US. 

The 10-year Treasury yield fell from its three-month highs touched on Wednesday. 

Shares of Centene and Microsoft rise

Shares of Centene are rallying after the health insurer’s third quarter profits exceeded expectations, driven by rate increases in Medicaid programs and higher membership in its health insurance exchange business. 

Microsoft’s stock gained after Chief Executive Officer Satya Nadella was given a pay package worth over $79 million for fiscal year 2024, a 63% increase from last year.

The package would have been $5 million higher if Nadella had not taken a pay cut to reflect cybersecurity risks in the company. 

Meanwhile, shares of Colgate-Palmolive fell on Friday despite beating third-quarter earnings expectations and raising guidance. 

Viking Therapeutics’ stock soars

Shares of Viking Therapeutics surged nearly 10% on Friday after the biotech company’s third quarter earnings beat analysts’ expectations. 

According to Yahoo Finance, Wall Street currently holds 13 buy ratings on the stock. 

Additionally, shares of Deckers Outdoor surged 14%, following its robust earnings results.

Deckers posted earnings of $159 per share, comfortably beating expectations of $124 per share earnings by analysts from LSEG. 

Meanwhile, shares of real estate investment trust Digital Realty Trust surged 11% before the opening bell after reporting record lease bookings for the third quarter.

Capri Holdings slump, while Tapestry rise

The stock of Capri Holdings slumped over 40% after a US judge blocked a pending merger. 

The merger was set to take place between the parent company of Michael Kors and Jimmy Choo and handbag maker Tapestry. 

Shares of Tapestry soared 15% on Friday. 

Additionally, shares of Apple fell nearly 1% before recovering all of its losses on Friday after data showed that iPhone sales in China fell in the third quarter, suffering from severe domestic competition. 

Positive economic data from the US

New orders for key US-manufactured capital goods increased more than expected in September. 

Additionally, investors will be monitoring the release of the GDP data from the US for the third quarter. 

Also, the monthly jobs report from the US will be released.

Traders will focus on the data, especially after the previous report came in hotter-than-expected.

That led to reduced bets for an oversized US Federal Reserve interest rate cut. 

Crude heads for weekly gains

Crude oil prices were on track for weekly gains after dropping by 7% last week. 

Oil prices were on the rise on increasing geopolitical tensions in the Middle East and uncertainties ahead of the US Presidential elections. 

At the time of writing, Brent crude prices were up 2.1% at $75.94 per barrel, while West Texas Intermediate oil was at $71.71 per barrel, up 2.2% from the previous close. 

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Even as the oil market struggles to break out of its current range of $70-$75 per barrel, adequate supply going into 2025 is likely to keep prices subdued. 

Traders have been monitoring the situation in the Middle East, hoping that further escalations would prop up oil prices even more. 

Oil prices had surged more than 10% after Iran attacked Israel. Brent had climbed back over $80 per barrel for the first time since August. 

But, the rally was short-lived. 

Since the October 1 attack by Iran on Israel, there have been no real threat to oil supply so far. 

In the immediate aftermath of Iran’s attack on Israel earlier this month, there were concerns about the former’s oil facilities being targeted. But, those concerns have subsided, and unless Israel targets oil facilities in Iran, prices are expected to remain in their current bandwidth. 

Supply glut in 2025?

In the absence of any major supply shocks in the Middle East, the focus has shifted back on enough supply and demand concerns for oil bulls. 

Poor demand in China this year has kept prices subdued.

The Asian giant is the top importer of crude oil in the world. 

According to the International Energy Agency (IEA), China’s growth in oil demand this year is likely to be 20% compared with a 70% growth in 2023.

Next year too, China’s growth in oil demand is likely to be just 20%.

“Chinese oil demand is particularly weak, with consumption dropping by 500 kb/d y-o-y in August – its fourth consecutive month of declines,” IEA said in its October monthly report. 

Meanwhile, the Organization of the Petroleum Exporting Countries and allies are set to increase oil production from December. 

Saudi Arabia and OPEC+ are scheduled to unwind some of the voluntary oil output cuts from December to regain market share. 

The development comes at a time when demand is already suffering. If OPEC goes through with their scheduled increases, oil prices could fall further. 

Non-OPEC supply growth

At the same time, growth in non-OPEC supply is also likely to weigh on sentiments. 

The IEA expects growth in non-OPEC oil supply to be around 1.5 million barrels per day this year and the next. This is outpacing OPEC’s supply growth. 

“The United States, Brazil, Guyana and Canada are set to account for most of the increase, boosting output by over 1 mb/d both years, which will more than cover expected demand growth,” IEA said. 

Additionally, the spare oil production capacity of OPEC+ is at historic highs, barring the exceptional period of COVID-19 pandemic. 

Excluding Libya, Iran and Russia, effective spare capacity comfortably exceeded 5 mb/d in September, according to IEA. 

Global oil stocks provide a further buffer, even as observed crude oil inventories drew by 135 mb over the past four months to their lowest since at least 2017 and OECD industry stocks remain well below their five-year average.

The agency, however, said that global refined product stocks have swelled to three-year highs, pressuring margins across key refining hubs. 

Meanwhile, IEA, itself has a public crude oil stock of over 1.2 billion barrels, with an additional half a billion barrels held under industry obligations. 

Even if there is a supply shock in the Middle East, the world is well established in terms of oil supply. 

In its Short-Term Energy Outlook for October, the US Energy Information Administration (EIA) forecast that global production of petroleum and other liquid fuels will increase by 2 million barrels per day in 2025, up from growth of just 500,000 barrels per day in 2024, driven by output from non-OPEC countries. 

We anticipate that production growth outside of OPEC+ will remain strong over the forecast period, and as a result, we anticipate OPEC+ producers will likely keep production less than their recently announced targets for much of next year.

China remains key

If supply is adequate going into 2025, the only other factor apart from geopolitical risk premiums, which can drive oil prices higher is robust demand from China. 

But, so far signals coming out of China haven’t been great, with imports of oil declining for the last few months. 

Next week, important indicators will be released with the purchasing managers’ indices in China, which could push up all prices equally.

“Since the announcements of the new stimulus measures mostly took place after the survey period for the September indices, there is a chance that sentiment indicators could have brightened somewhat in October. However, we are not overly optimistic,” Barbara Lambrecht, commodity analyst at Commerzbank AG, said in a report.

In addition, the rapid advance of electric vehicles in China is also curbing oil consumption in the world’s top importer. This will only increase as the world moves away from fossil fuels. 

Price forecasts for rest of 2024

Oil prices are increasingly susceptible to the downside despite Middle East tensions continuing to simmer. 

“For the remainder of the year, I think oil prices will continue to face downward pressure. Inventories remain high, but demand is down,” Rizvi of Primary Vision Network told Techopedia.com. 

In July, Rizvi maintained its oil prices at $70 per barrel, citing global economic slowdown. 

Meanwhile, ANZ Research has also cut its oil price forecasts for the rest of this year.

The agency now sees Brent crude oil prices at $80 per barrel in 2024 from its earlier forecast of $87 a barrel. 

As for WTI prices, ANZ expects the US benchmark to trade at $78 a barrel from its earlier estimate of $84 a barrel. 

ANZ Research said:

OPEC supply policies are struggling to support prices, as concerns of weaker demand persist. With investors increasingly bearish on economic growth, sentiment is likely to remain weak. This comes as seasonal trends result in a slowdown in oil demand.

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The US Federal Trade Commission (FTC) has recently blocked Tapestry’s $8.5 billion acquisition of Capri Holdings, bringing Chair Lina Khan’s strict antitrust measures back into the spotlight.

Khan, with her uncompromising stance on monopolistic takeovers is often raising concerns within business circles and is also a frequent target of congressional Republicans, who accuse her of being overly aggressive in enforcing antitrust laws.

Now, in the run-up to the US elections, Khan has also been seen appearing at events with prominent Democrats, and while Democratic Senate candidates across Arizona, Texas, and Illinois are vocal in their support for FTC chair, Democratic nominee Kamala Harris has notably refrained from campaigning with her, creating tension within the party.

The progressive faction of the party is faulting Harris for not openly siding with Khan or defending her even as the FTC chair battles opposition from not just Republicans but influential businessmen who are supporters of the Democrat party.

Harris faces donor pressure as tech moguls oppose Khan

In a letter to a GOP lawmaker last year, Khan noted that under her watch, the FTC has taken action against 38 mergers since June 2021, and that companies have abandoned 14 mergers during FTC investigations.

These include tech giants like Nvidia, Meta, Microsoft, Apple, and Amazon.

At the center of Harris’ dilemma are her prominent supporters like billionaire Mark Cuban and LinkedIn co-founder Reid Hoffman, who have voiced their opposition to Khan.

Recently, Cuban said he believed the Democratic nominee should replace Lina Khan as head of the Federal Trade Commission.

These influential backers argue that Khan’s hardline approach could stifle innovation and investment in the tech sector.

“The bigger picture is, she’s hurting more than she’s helping,” Cuban told Semafor.

Hoffman, on the other hand, who has donated millions to the Democrat campaign, has said that Khan is “waging war on American business.”

Hoffman is under FTC investigation concerning his involvement with companies like OpenAI and Inflection AI, and a Microsoft investment that allegedly circumvented FTC scrutiny.

Harris’ choice to keep a cautious distance from Khan is being seen as a response to these influential figures, who have expressed hopes that Harris might dismiss Khan if she wins the presidency.

By doing so, Harris would signal a shift toward a more business-friendly stance, distancing herself from the stronger antitrust measures enacted under President Joe Biden.

Progressive backlash over Harris’ distancing from Khan

On the other hand, Khan’s supporters, largely from the progressive faction of the Democratic Party, view her agenda as essential to reining in corporate power.

They argue that Harris’ failure to align herself with Khan’s antitrust mission could weaken the party’s base, especially among voters frustrated with economic inequality and large corporate influence.

In a report by POLITICO, Hal Singer, an economist at the University of Utah, cautioned that Harris’ refusal to defend Khan “zaps the life out of the progressive base” and could be a missed opportunity to claim a populist stance.

Jeff Hauser of the Revolving Door Project echoed these concerns in the report, warning that Harris’ attempt to attract moderate Republicans may be undermining the populist energy Democrats need to counter Donald Trump.

Harris’ stance risks populist votes, analysts warn

For Harris, walking a fine line between populist calls for corporate accountability and the business interests of her donors has become a central balancing act of her campaign.

Harris’ campaign team maintains that her economic policies include measures to increase taxes on billionaires and curb price gouging, aligning with aspects of Biden’s economic platform.

However, progressives argue that these measures may fall short of the bold antitrust stance represented by Khan, whom they see as an essential counter to corporate power.

A poll conducted by Lake Research Partners showed that over 65% of voters in key swing states support lawsuits aimed at curbing monopolies, signaling a broader public approval for the FTC’s objectives.

Critics warn that Harris’ approach could allow Trump to capture the populist narrative by positioning himself as a defender of ordinary Americans against corporate excess.

However, some experts have sought to dismiss the importance of a Big Tech pushback as a valid poll concern.

Adam Kovacevich, former Google executive and head of the tech lobbying group Chamber of Progress, pushed back on the idea that voters are rallying behind Lina Khan’s aggressive stance against Big Tech’s market power.

“The anti-corporate left overestimates the size of its voter base,” Kovacevich said.

He told POLITICO that the Biden administration “lost alignment with the median voter on economic issues,” and that Harris is now working to win over moderates who are wary of Trump but also view her as potentially too economically radical.

“She’s framing her messaging and approach to business differently because that’s what swing voters want to hear,” Kovacevich explained.

The future of antitrust enforcement in a Harris administration

Despite her reluctance to openly champion Khan’s policies on the campaign trail, Harris is still expected to retain Khan as FTC chair if she wins.

Much of the Biden administration’s anti-corporate agenda, according to analysts, remains woven into Harris’ platform, even if she is not prioritizing it in campaign rhetoric.

Dan Geldon, former chief of staff for Senator Elizabeth Warren, commented in the POLITICO report that the “success of Bidenomics” would likely encourage a Harris administration to uphold the legacy of Khan’s tenure at the FTC.

Harris’ critics, however, argue that by not rallying around Khan now, she risks alienating progressive voters and could miss a vital opportunity to distinguish herself from Trump on issues of corporate accountability.

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The Venezuelan government, under Nicolás Maduro, expressed its deep discontent on Thursday following Brazil’s decision to block its admission into the BRICS group of emerging economies.

Caracas views this decision as a “hostile action” and a form of “aggression” against its interests, given that Venezuela has been striving for years to join this coalition.

In a formal statement, Venezuela’s Ministry of Foreign Affairs condemned the veto as a reflection of “hatred, exclusion, and intolerance fostered by Western powers” aimed at preventing the nation from being part of the organization.

Rising Tensions between Venezuela and Brazil within BRICS The statement continued, asserting that “this action represents an offence against Venezuela and adds to the unjust sanctions imposed on a brave and revolutionary people.

No scheme or strategy aimed at undermining Venezuela will change the course of history.”

Additionally, Nicolás Maduro’s administration claimed to have received support from other countries at the summit in Russia, for moving forward with Venezuela’s integration into this initiative.

Brazil’s government, under Lula da Silva, was one of the strongest allies of Nicolás Maduro in Latin America, but recently it has shown concern over human rights in Venezuela and a strong stance against the outcome of the July elections in the country.

All this raises questions about Venezuela’s political and economic future, if Maduro continues in power and if the United States decides to strengthen the sanctions against the country.

Energy dynamics: Brazil’s position on Venezuela joining BRICS

Brazil’s energy landscape, largely driven by its hydrocarbon resources, plays a significant role in its hesitance toward Venezuela’s entry into the BRICS group.

Over the past ten years, Brazil has seen a remarkable increase in oil production, soaring by 64% to exceed 3.6 million barrels per day by the end of last year.

However, in 2024, there has been a slight drop to about 3.4 million barrels per day.

Despite this minor decline, Brazil remains the leading crude oil producer in Latin America.

In stark contrast, Venezuela has experienced a steep decline in its oil production, plummeting approximately 65% from over 2.7 million barrels per day to around 943,000 barrels per day.

This significant decrease has resulted in Venezuela losing its long-held position as the region’s dominant oil producer, as noted by local media Petroguía.

On the commercial side, Brazil has dramatically increased its crude oil and derivative exports to the United States, multiplying its volume fourfold over the decade.

As of late 2023, these exports peaked at 400,000 barrels per day, securing Brazil’s place among the top five oil suppliers to the US—a list that includes Canada, Mexico, and Saudi Arabia, putting it in direct competition with Venezuela.

BRICS more about geopolitical strategy than economic benefits?

Economist Henkel García from Econométrica suggested in a previous Invezz report that Venezuela’s pursuit of BRICS membership was more about geopolitical strategy than immediate economic benefits.

He noted that the focus appeared to be on gaining support from BRICS nations to strengthen alliances amidst shifting global dynamics.

García also pointed out that geopolitical manoeuvres, such as aligning with countries at odds with the US, such as Russia or North Korea, could have significant ramifications beyond mere economic considerations.

Meanwhile, Venezuelan economist Alejandro Grisanti was sceptical about the practical benefits of BRICS membership for Venezuela.

He argued that BRICS members are characterized by their large economies and populations, criteria Venezuela does not meet.

Grisanti compared Venezuela’s economy to that of the Dominican Republic and its population to that of Panama and Costa Rica, questioning the potential economic impact of joining BRICS.

Venezuela’s push to join BRICS, driven by its oil reserves and strategic alliances, highlights a complex interplay of geopolitics and economic aspirations.

This indicates that whether or not Venezuela joins the BRICS will not result in a big economic shift.

It also implies that for Venezuela to enhance its investment and overall economic landscape, the country must first resolve its political crisis.

A closer look at Brazil-Venezuela political relations

Political analyst and electoral consultant Aníbal Sánchez explored the complex factors influencing the relationship between Brazil and Venezuela.

He pointed out the potential for stronger ties between the two countries, particularly with former President Luiz Inácio Lula da Silva stepping in as a mediator.

Sánchez also discussed the challenges arising from Brazil’s recent political decisions, especially in light of its role in the BRICS group.

He emphasized the intricate mix of issues at play, including territorial disputes and Brazil’s support for different factions within Venezuela.

In this shifting diplomatic landscape, the Brazilian Foreign Ministry’s approach within BRICS highlights the essential nature of mutual trust among neighbouring countries.

Sánchez notes that the erosion of trust due to unfulfilled commitments following the Venezuelan elections has impacted Brazil’s decision-making and its ongoing resistance to Venezuelan policies.

As Brazil and Venezuela turn over a new leaf under President Lula da Silva, there are clear signs of efforts to mend diplomatic relations on the global stage, indicating a shared goal of promoting stability and cooperation in the region.

Sánchez highlights that Brazil’s interests go beyond just oil, reflecting a wider dedication to regional stability and strategic positioning while navigating these complex dynamics.

At the BRICS summit held in Kazan, the Venezuelan government voiced its condemnation of Brazil’s decision to block its entry into the group, describing the action as “aggression and a hostile gesture” in an official statement.

“At the same time, President Maduro was busy engaging in strategic discussions with Iranian official Masoud Pezeshkian, aiming to negotiate bilateral agreements focused on oil, mining, and healthcare, while underscoring a narrative of strong solidarity with Tehran”, said Sánchez.

In a display of support, Russian President Putin praised Venezuela as a reliable and longstanding partner in both Latin America and the broader global context.

During meetings with notable leaders such as China’s Xi Jinping, India’s Narendra Modi, and Turkey’s Recep Tayyip Erdoğan, President Maduro emphasized Venezuela’s role as a key ally outside Western influence, showcasing its potential as a significant energy player.

This diplomatic shift places Venezuela on a unique political path that sets it apart from other South American nations like Argentina or Panama.

It appears to be moving toward closer ties with Mexico and Colombia, thanks to its advantageous geographic position on the continent.

These developments raise important questions about the foreign policy strategies of the incoming US administration, prompting a need to rethink priorities related to national interests, especially in light of issues such as uncontrolled migration and fluctuating fuel prices.

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