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Market Update: April 27th, 2022. Gas, Twitter Buy Out, China Exodus and More

Last week contained another round of interesting economic developments, ranging from Elon Musk’s ambitious takeover of Twitter to broader global political challenges. Furthermore, many Americans either made payments or received tax returns, which will likely eventually be reflected in the broader economy.

Here are some of the most important economic and financial stories that you need to be paying attention to.

Elon Musk Locks in $44 Billion Twitter Deal

After an extensive period of back-and-forth drama—which seemed excessive even for the world of Wall Street—Twitter and multi-billionaire Elon Musk finally reached a deal that will involve him buying the entire company for $44 billion. The deal represents one of the largest hostile takeovers in history, though numerous members of Twitter’s board (including founder Jack Dorsey) have spoken positively about the deal.

Ultimately, Musk ended up paying $54.20 per share, which is approximately a 38 percent premium on Twitter’s previous stock price. On Monday, Musk made a statement, indicating “Twitter has tremendous potential—I look forward to working with the company and the community of users to unlock it.” Thus far, Musk has broadly indicated that he hopes to promote “free speech” on the platform, as well as combat the large amount of bot and automated accounts, though it is not yet clear which steps will be taken in pursuit of these broader goals.

Russia Cuts Gas to Europe

On Tuesday, Russia—amidst its ongoing war with Ukraine—decided to cut gas deliveries to two key European countries, Poland and Bulgaria. Both Poland and Bulgaria are members of the European Union and NATO, which are two key forces combatting Russia’s ongoing efforts in Ukraine.

The recent move made by Russia highlights the country’s willingness to leverage its large energy supply in order to deter any sort of intervention from its neighbors. Russia has also indicated a commitment to expanding its wartime mission all the way to Ukraine’s borders with Moldova and Romania, suggesting the war will almost certainly continue on and affect the global economy.

Small Businesses Prepare for Price Hike

According to a recent report published by Bloomberg, 4 in 10 (40 percent) of American small businesses plan to increase their prices by ten percent or more within the next few months. These price changes come during an economic period marked by the highest inflation witnessed in decades, which currently hovers around 8 percent.

Due to the way that inflation is calculated—comparing the current month to the same month the year before—most economists expect that inflation is about to level off or even decrease. However, that doesn’t mean that costs, in general, should be expected to go down. According to Janet Yellen, chairwoman of the Federal Reserve, inflation will likely persist into the near future.

China Pulls Capital Out of Africa

After years of continuous development and investment, new data suggests that China appears to be backing off of its push into various markets across the African continent. In fact, during the height of the pandemic in 2020, Bloomberg suggests that China reduced its lending across Africa by 78 percent compared to the year before—far more than it had reduced lending in any other part of the world.

Whether this move is simply a pandemic-related pullback or is evidence of a much more significant long-term shift remains yet to be seen. However, it is clear that China’s banks and other institutions are hesitant to begin resuming cash outflows to other parts of the world. 

Oil Prices Drop Below $100 per Barrel

Despite the fact that many of the world’s leading economists projected a high price hike due to the War in Ukraine—with some claiming that prices could easily break the $200 mark—it appears that global oil prices are experiencing a continual decline. As of Monday, April 25, crude oil prices are once again below the critical triple-digit mark, currently hovering around $98.

It’s important to avoid jumping to any major conclusions about where the oil market might be headed—week by week data regarding the oil market, at the very least, should be taken with a huge grain of salt. Nevertheless, a drop in oil prices might indicate that the inflation rate might be on the verge of leveling out.

Treasury Yields Exhibit Dip

According to CNBC, the 10-year US Treasury note—generally considered a benchmark for the highly active bond market—fell 8.9 basis points on Tuesday, dropping down to a rate of just 2.74 percent. 30-year Treasury notes, another important benchmark, also experienced a decline in their yields, dropping down 5.1 basis points to 2.84 percent.

All things considered, these drops are relatively small. However, they do indicate a certain level of pessimism that likely exists within the Federal Reserve, along with the general expectation that the Fed is about to raise interest rates. We’ll pay close attention to any moves the Fed decides to make, along with any other variables that might affect Treasury Yields.

Next week Zillow, Redfin, and OpenDoor will all host their earning calls next week. Recently we’ve seen a hard hit to prop-tech companies and many layoffs as a result. This week, Redfin’s stock dropped to $12.14, the second-lowest price in the last year.

Andrew is a freelance writer that primarily focuses on real estate and finance topics. He graduated from the University of Colorado with degrees in Finance and Political Science and has since worked in the real estate, life insurance, and digital marketing industries. When he is not writing, Andrew enjoys skiing, playing piano, painting, and spending time with his wife (Maggie) and cat (Crow).