During a recent summit, Brazilian President Luiz Inacio Lula da Silva highlighted the necessity of creating new payment systems for the BRICS nations.

He stressed the importance of financial independence and suggested that their New Development Bank could be a viable alternative to conventional Bretton Woods institutions.

Lula, speaking via video link due to a recent head injury, underlined the importance of a multipolar financial system that reflects the BRICS group’s goals for the global economy.

He advocated for a serious, cautious approach to this issue, supported by technological expertise, and recommended fast action.

Can BRICS lead to economic development and global significance?

Lula emphasized BRICS’ critical role in reforming the international financial structure, moving away from a paradigm in which developing countries predominantly assist industrialized countries.

He emphasized the bloc’s contribution to global economic progress and its role in developing a more equitable international trade environment.

In addition to economic topics, Lula reiterated his calls for diplomatic negotiations between Russia and Ukraine and denounced Israel’s military actions in Gaza.

He cautioned against the potential conflict escalation in the West Bank and Lebanon. His emphasis on diplomacy aligns with BRICS’ mission to encourage discussion and peacefully resolve global disputes.

BRICS growth and Russian leadership

Originally made up of Brazil, Russia, India, China, and later South Africa, the BRICS diplomatic group has since expanded to include countries like Egypt, Ethiopia, Iran, and the United Arab Emirates.

Russian President Vladimir Putin has played a key role in enhancing BRICS’ stature as a counterbalance to Western influence in global politics and trade.

President Lula da Silva’s proposals for new financial strategies among BRICS nations are a significant move towards achieving financial self-reliance and reforming the global economic system.

As BRICS continues to grow its impact and push for diplomatic resolutions to worldwide conflicts, its contribution to fostering a multipolar world is becoming increasingly vital.

Brazil’s position on Venezuela’s attempt to join BRICS

In a bid to reduce its isolation on the global stage, especially after the recent presidential elections, the Venezuelan government is moving to join BRICS, which includes countries like India, Russia, Iran, China, South Africa, and Brazil.

However, it is encountering strong opposition from Brazil, a nation that was once considered a supporter.

President Luiz Inacio Lula Da Silva has reportedly directed his foreign minister, Mauro Vieira, to reject Venezuela’s application for membership.

Furthermore, Celso Amorim, a key international affairs advisor to the Brazilian administration, has voiced his concerns about Venezuela joining the group.

He highlighted the need for caution to ensure that BRICS doesn’t expand too quickly.

While Russia, China, and Iran maintain close relations with Venezuela, Brazil’s prominent role in South America makes its viewpoint particularly impactful in this situation.

A decision by Brazil to deny Venezuela’s entry could significantly hinder Venezuela’s diplomatic efforts and highlight the hesitance of much of the international community to overlook the events of the July 28th presidential elections.

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In a significant move, the Bank of Canada cut its benchmark interest rate by 50 basis points, lowering it to 3.75% in its October 2024 decision, as expected, and signalling that it will continue to lower its rate should the economy develop as expected.

This move is consistent with market expectations and demonstrates the bank’s willingness to explore more rate decreases if the current economic scenario persists as predicted.

The Bank of Canada’s current rate cut follows three previous cuts totalling 25 basis points.

This technique was prompted by recent data showing a significant drop in Canadian inflation rates.

In September, inflation decreased to 1.6%, which is the first time it has dipped below the 2% target in three years.

Furthermore, the bank noted a drop in per capita consumption and a softening labour market, highlighted by an unemployment rate that has risen to over 6.5%—a level not seen for more than two years.

Together, these indicators suggested a need for lower borrowing costs to help ease economic pressures.

Insights from the Monetary Policy Report

The Bank of Canada’s current Monetary Policy Report provides insight into the bank’s inflation and GDP growth expectations.

Policymakers expect inflation to stay close to target levels in the foreseeable future, with inflation risks looking to be fairly balanced in both directions.

Furthermore, the bank predicts a moderate 1.2% GDP growth this year, with a greater 2.1% growth rate expected next year.

These estimates are cautiously optimistic in the face of persistent economic concerns.

GDP growth is expected to steadily accelerate during the projection horizon, aided by decreasing interest rates.

This forecast incorporates the net effect of modest increases in consumer expenditure per person and slower population growth.

Residential investment growth is also expected to accelerate as robust house demand drives up sales and renovation spending.

Business investment is projected to increase as demand rises, and exports should stay strong, aided by sustained demand from the United States.

In the report, the Bank forecasts inflation to stay close to the goal over the projection period, with upward and negative pressures on inflation broadly equal.

The upward pressure from housing and other services progressively fades, and the downward pressure on inflation weakens as excess supply in the economy is absorbed.

Overall, the Bank expects GDP growth of 1.2% in 2024, 2.1% in 2025, and 2.3% in 2026. As the economy improves, excess supply is gradually absorbed.

Review of the Bank of Canada’s global economic outlook

According to the latest insights from the Monetary Policy Report, the Bank of Canada continues to project that the global economy will grow at roughly 3% over the next two years.

Interestingly, the United States is expected to see stronger growth than earlier estimates, while China’s economic outlook appears to be less robust.

In the eurozone, growth has been slow but is predicted to make a modest recovery next year.

Recently, advanced economies have seen a drop in inflation rates, bringing them closer to the targets set by central banks.

Moreover, since July, global financial conditions have become more relaxed, largely due to market expectations of lower policy interest rates.

It’s also worth noting that current global oil prices are about $10 lower than what was estimated in the July Monetary Policy Report.

This thorough assessment demonstrates the Bank of Canada’s careful consideration of various economic factors that are shaping the global environment.

What’s the importance of the rate cut?

The Bank of Canada’s decision to cut its main interest rate has substantial ramifications for a variety of economic participants.

By lowering borrowing rates, the bank hopes to increase consumption and investment, so increasing overall economic activity and promoting growth.

Lower interest rates also offer relief to both businesses and households by reducing the cost of servicing debt, potentially leading to higher disposable income and improved financial stability.

Ultimately, this rate cut demonstrates the central bank’s commitment to fostering economic recovery and tackling current challenges, all while striving to maintain a stable and sustainable economic environment for Canada.

In summary, the Bank of Canada’s decision to lower its benchmark interest rate demonstrates its proactive approach to shifting economic conditions.

By changing its monetary policy to handle the complexities of inflation and growth, the bank hopes to navigate uncertainty and give critical support to Canada’s economy.

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Gold prices extended their gains and hovered near record high levels on increased safe-haven demand for the precious metal. 

Gold’s rally is increasingly gaining momentum ahead of the US presidential election in November. 

Former President Donald Trump and Vice President Kamala Harris are running neck-and-neck in opinion polls, and a possibility of Trump victory is seen as a threat to a stable geopolitical outlook, according to Fxstreet.com. 

Additionally, the 16th BRICS summit is taking place in Russia, where Moscow is discussing finding an alternative to the dominance of the US dollar. A currency backed by gold is touted as a viable option, Fxstreet said in a report. 

Gold prices fueled by geopolitical tensions

Despite efforts to stabilise the situation in the Middle East, war  between Israel and Iran-backed Hezbollah in Gaza and Lebanon rages on. 

“US Secretary of State Anthony Blinken seems no closer to securing a ceasefire despite headlines announcing progress, as was the case on his last visit,” Joaquin Monfort, editor at Fxstreet, said in a note. 

Gold prices on COMEX have risen more than 30% since the beginning of this year. “As things currently stand, that would be the strongest annual increase in 45 years,”Carsten Fritsch, commodity analyst at Commerzbank AG, said in a report. 

Furthermore, reports from Sky News claimed that Blinken had to take cover in a bunker on Wednesday after air raid sirens went off over Tel Aviv. 

Trump trade narrative has reinforced uptrend in gold

The trade narrative has changed in the US with the rising probability of Donald Trump winning the Presidential elections. 

Kelvin Wong, senior market analyst at OANDA:

Given that Trump’s “generous” corporate tax cuts proposal to reduce the tax rate to 15% from 21% will likely widen the US federal deficit further, in turn leading the market to question the credit standing of the US government (such as the prospect of more frequent government shutdowns) that may see an erosion of confidence in US Treasuries and strengthened Gold.

If Trump wins, he is likely to impose more tariffs on the likes of China, which could reignite a trade war between the two top economies of the world. This is bullish for gold in terms of a safe-haven asset. 

Wong said:

Trump’s proposed tax and trade tariffs policies are likely to reignite upward inflationary pressures in the medium to long-term.

Market sentiment favours gold

The sentiment among investors about gold remained positive even with higher prices. 

Traders are believed to be treating any sort of price declines in gold as a major buying opportunity.

This means any drop in gold prices is short-lived and limited in scope, according to Commerzbank’s Fritsch. 

Moreover, significant inflows have been coming into exchange-traded funds (ETFs) for gold.

According to a Bloomberg report, inflows into gold ETFs totalled 13 million tons for the last week. 

However, Commerzbank AG believes that the current upswing in gold prices to be an exaggeration, and a correction is long overdue. 

“It is not possible to predict when and from what level the correction will start. However, the extent of the correction will presumably increase with the price level,” Fritsch said. 

At the time of writing, the December gold contract on COMEX was at $2,759 per ounce, largely unchanged from the previous close.

The contract had hit a record high of $2,772.55 per ounce earlier on Wednesday. 

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Microsoft Corp. is facing increased difficulties in retaining its female, Black, and Latinx employees, despite ongoing efforts to promote a diverse workforce.

According to the company’s latest diversity and inclusion report, which measures both voluntary and involuntary departures, these groups have been leaving at an accelerated rate, posing challenges for the tech giant’s diversity initiatives.

For the fiscal year ending June 30, women accounted for 32.7% of departures, up from 31% the previous year.

Black workers represented 10% of US exits, compared to 8.7% in 2023, while Latinx departures climbed to 9.8% from 8%.

In contrast, the report noted that fewer male and Asian employees left the company during the same period.

Poaching and business shifts cited as causes

Microsoft has attributed this rising trend in departures to a combination of factors, including increased poaching by rival companies and a strategic shift away from its physical and online retail businesses, which have historically employed a more diverse workforce.

Lindsay-Rae McIntyre, Microsoft’s Chief Diversity Officer, acknowledged the challenge in an interview. “Once that talent arrives at Microsoft, we know that we’ve got to do more,” she said, as per a report by Bloomberg.

“That includes providing mentors and career options that give them an ongoing reason to invest and stay at Microsoft.”

McIntyre also highlighted the growing number of jobs in cloud-computing data centers, which are distributed across various geographic locations.

These roles, she noted, offer opportunities to improve diversity in hiring but also require enhanced efforts to retain these employees long-term.

Diversity crucial development of AI products

The stakes for Microsoft’s diversity efforts are high, especially as the company works to ensure its emerging artificial intelligence products are free from racial, gender, and other biases.

“It’s going to take lots of perspectives to birth a trusted AI that everybody wants to engage with,” McIntyre said.

Microsoft is not alone in grappling with this issue. Few companies disclose employee retention data broken down by racial and gender categories.

However, last year, BlackRock Inc. released an audit showing that high departure rates among Black and Latinx leaders nearly offset the firm’s progress in diversifying its leadership ranks.

As Microsoft faces these retention challenges, its ability to address them will be crucial to its future workforce diversity and the inclusivity of its AI products.

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US benchmark equity markets fell on Wednesday as Treasury yields continued to rise amid a shallow outlook for the Federal Reserve’s rate-cut cycle. 

At the time of writing, the Dow Jones Industrial Average was down 1.4%. The average shed more than 600 points, and fell for the third straight session. 

The S&P 500 index was down 1.5%, while the Nasdaq Composite fell more than 420 points. 

Earlier in the session, the benchmark 10-year Treasury note yield topped 4.25%, reaching its highest level since July 26. 

Robust economic data pushes yields higher

Strong economic data from the US are fueling the rise in Treasury yields. 

The US economy continues to remain resilient, which is also dampening hopes of a larger Fed rate cut in November. 

“To me, it’s all about the impact of higher rates. The market is repricing the probability that the Fed can aggressively cut rates,” Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management, told CNBC. 

“There have been parts of the economy that haven’t felt the impact of rising interest rates yet, but the longer rates remain higher, the more different parts of the economy have to reprice to that reality…the economy is out of equilibrium,” Schutte told CNBC. 

Shares of Coca Cola and Tesla fall

Shares of Coca Cola fell about 2% on Wednesday even though the company’s third-quarter earnings beat expectations. 

Tesla’s shares also dropped more than 1.5% as the company is scheduled to release its third-quarter earnings results after the closing bell on Wednesday.

McDonald’s shares drop after E. coli outbreak

Shares of McDonald were on track for its worst day since March 2020 as the fast-food giant scrambles to limit the damage from an E. coli outbreak. 

The outbreak linked to Quarter Pounder burgers has killed one person and sickened nearly 50 others in several US states, according to a Reuters report. 

The outbreak has also sickened people in more than 10 US states, with 10 hospitalised due to serious illness, according to the US Centers for Disease Control and Prevention (CDC). 

The CDC and McDonald’s are scrutinising McDonald’s supplies of slivered onions and Quarter Pounder beef patties as they investigate the cause of the E. coli outbreak, Reuters reported. 

At the time of writing, shares of McDonald’s Corp were down nearly 5% from the previous close. 

Walmart shares rise, but Boeing slips

Shares of Walmart rose almost 1% on Wednesday to reach a fresh all-time high on Wednesday. 

Shares of Walmart have outpaced the S&P 500 index in 2024, up 57% compared to the index’s nearly 22% jump this year, according to CNBC. 

Meanwhile, the stock of Boeing slipped nearly 3% after reporting its largest quarterly loss since 2020.

The company reported a loss of nearly $6 billion in the third quarter, while also losing more than $4 billion in its commercial aeroplane sector. 

Meanwhile, shares of Starbucks fell 1% after the coffee chain reported its results for the fourth quarter.

The company posted declines in same-store sales, net revenue and profit due to weaker demand in the US. 

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