Daily Update: November 2, 2022

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.

Video Games Return to Reality

The video game industry thrived during the pandemic, as many people sought refuge and connection in virtual worlds. Now, more than two years later, there are signs the gold rush of gaming may be winding down.  

Gaming M&A peaked early this year, with several record-setting deals that propelled the industry’s gross transaction value to more than $100 billion by June, well above historical norms. Following cash-rich Microsoft’s proposed acquisition of Activision Blizzard, a prominent video game publisher, attention turned to Unity Software, which provides the technological scaffolding for many video game titles.  

But as anyone who’s tried to buy a game console in the past two years knows, the industry did not get through the pandemic entirely unscathed. Console-makers struggled to get hardware to store shelves amid surging demand and supply chain challenges, and workforce disruptions led to development delays for popular game franchises. 

There is a sense that the fourth-quarter holiday selling period will prove more crucial than usual. After a dearth of game releases in the second quarter due to strained development conditions, there have been more new titles to pique players’ interest coming out in the second half of the year. 

Game console vendors will have to deliver on promises of increased hardware production for the market to fully capitalize on the new content, according to S&P Global Market Intelligence tech reporter Anser Haider and Kagan analyst Neil Barbour in a recent MediaTalk podcast. On top of supply constraints, inflation is cutting into vendor margins. 

"I think there's potential, particularly in the fourth quarter, to sort of win back some of the losses that are happening right now in the market, but a lot of things have to go the market's way, not the least of which are inflationary pressures and other macroeconomic strains," Barbour said on the podcast. 

Today is Wednesday, November 2, 2022, and here is today’s essential intelligence. 

Written by Christina Mitchell.

Economy

Fed Pivot Outlook Boosts Hopes Of End To U.S. Stocks' Bear Market

Hopes for a forthcoming policy pivot from the Federal Reserve and a modest U.S. stock market rally in October following months of losses have sparked optimism that equities' bear market days may be numbered. On Oct. 12, the S&P 500 settled at 3577.03, down nearly 25% on the year and the lowest close for the large-cap index since November 2020. The S&P 500 then rallied more than 9% through Oct. 28, as other equity indexes have jumped from their recent lows as well.

—Read the article from S&P Global Market Intelligence

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Capital Markets

Digital Asset Strategies — To Diversify, Or Not?

Over the past 13 years, the cryptocurrency market has reached a cumulative market capitalization in the trillions. As of September 2022, Lukka Enterprise Data has listed 50 cryptocurrency assets with a market capitalization of over USD 1 billion. With an increasing number of investment options to choose from, many market participants are wondering: Should digital asset portfolios be diversified? And can diversification of cryptocurrency assets mitigate risk in a highly volatile asset class?

—Read the article from S&P Dow Jones Indices

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Global Trade

Nickel CBS October 2022 — Potential LME Russian Nickel Ban Supports Prices

S&P Global Commodity Insights discusses the nickel market within the broader macroeconomic environment and provides five-year supply, demand and price forecasts. The London Metal Exchange three-month, or LME 3M, nickel price closed September at $21,107 per tonne. The gains made earlier in the month were erased when prices fell following the U.S. Federal Reserve's Sept. 21 interest rate hike.

—Read the article from S&P Global Market Intelligence

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Sustainability

The Science-Based Approach To Confronting Climate Risk

How is S&P Global Sustainable1 using climate science to understand the physical risks on the horizon? Simply put, greenhouse gases change the behavior of the atmosphere and the oceans. It starts by looking at how these alterations lead to changes in what we call hazards: higher temperatures, more extreme precipitation-related events, more extreme storms and higher likelihood of wildfires and droughts, to name some examples.

—Read the article from S&P Global Sustainable1

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Energy & Commodities

Fuel For Thought: Oil Investment Lies At Heart Of The Energy Industry’s Broken Relationships

The media's attention on the fraught ties between Saudi Arabia and the U.S. belies the fundamental tension of the oil industry's search to find the right price to encourage spending on projects while not choking off that same industry growth. In terms of broken relationships, one sticks out for the oil industry: the correlation between investment and prices.

—Read the article from S&P Global Commodity Insights

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Technology & Media

Listen: Next In Tech | Episode 89: Climate Impacts At COP27

The 27th meeting of the UN Climate Conference is coming up in the second week of November, and the activities happening in Sharm el-Sheikh, Egypt, will affect technology use and policy. Thomas Yagel, chief operating officer for Sustainable1, joins host Eric Hanselman to discuss what we can expect from COP27 and what to look out for around the conference. Technology plays a role not only in emissions but can also raise visibility into many of the issues on the table.

—Read the article from S&P Global Market Intelligence

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