S&P 500 Sets 70th Record of 2021; Argentina and Colombia Post Gains

Argentina’s Merval index climbed 1.78%, while Colombia’s Colcap gained 0.54%

Markets Wrap
By Bloomberg Línea
December 29, 2021 | 06:26 PM

U.S. stocks rose on a day of light trading volume, while the decline in technology stocks slowed amid speculation that the economic recovery may weather the rise in coronavirus cases. Treasury bonds fell, as did the U.S. dollar.

After spending much of the session flat, the S&P 500 rose 0.14% to reach its 70th record closing of the year. The Dow Jones industrial index also ended the day at an all-time high, while the Russell 2000 rebounded and the Nasdaq 100 ended slightly lower.

Fears relating to the Omicron variant are receding thanks to mounting evidence that the fast-spreading variant causes milder symptoms, even as Covid-19 cases worldwide surpassed one million for the second day in a row. The evolution of the coronavirus, along with Federal Reserve policy tightening and China’s outlook, are seen as among the top risks for 2022.

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We may have a relatively quiet last week of the year after all,” wrote Matt Maley, chief market strategist at Miller Tabak + Co. “That said, markets with low trading levels can change quickly, so investors will want to stay nimble.”

U.S. Treasury bonds fell, with the 10-year yield dropping 7.4 basis points to 1.55%, breaking the 50-day moving average that has contained it since November 29. The U.S. dollar weakened against all of its G-10 peers except the yen. And Bitcoin remained below $48,000 after a drop that hinted at a reduced appetite for more speculative assets.

Across Latin America the majority of stock markets closed with losses. The Mexican index suffered the sharpest drop, down 0.92%, followed by the Brazilian IBovespa (0.72%). The only stock exchanges that ended the day with gains were Argentina’s Merval (up 1.78%) and Colombia’s Colcap (0.54%).

Here is how Latin American markets performed today:

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Argentina

The country recorded 42,032 Covid-19 cases on Wednesday, the highest number since the beginning of the pandemic. The previous record had been set in May, when daily infections reached 41,080. Despite the rise in infections, the number of deaths has remained stable and the government has ruled out new restrictions.

Economy Minister Martín Guzmán confirmed in an interview with El País that the agreement between Argentina and the IMF will be sent to Congress for discussion when it is ready, “but there is still a need for international consensus” to close the new program. He also said “there have been deep understandings” with the technical staff of the lender and that some shareholders did not reach “a full understanding” of the errors when the government of Mauricio Macri was handed credit totaling $57 billion.

The government confirmed that it will implement a single annual increase of between 17 and 20% for electricity and gas in 2022. The official announcement will be made between January and February. This was confirmed to Bloomberg Línea by sources from the Energy Ministry, a portfolio led by Darío Martínez and which operates under the Ministry of Economy.

Brazil

The Brazilian stock market ended the second-to-last trading session of the year with more losses despite the good performance of Wall Street.

The Ibovespa ended the trading session at 104,107 points, down 0.72%, while the dollar jumped to R$ 5.69, trading up 1.16%.

On Wednesday, the Brazilian stock market was weighed down by the drop in shares of Petrobras and the potential impact of the pandemic on shares in the tourism sector, as well as airlines. Investors remain concerned about the impact of a generalized civil service adjustment on government accounts, which has put pressure on the exchange rate and medium-term interest rates.

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Chile

Chile’s central bank considered raising its key rate by 150 basis points earlier this month amid stronger-than-expected consumer spending, before opting for a 125-point increase so as not to surprise the market, according to minutes of its meeting.

Chile may have taken first place in Bloomberg’s Covid Resilience Ranking, but that doesn’t mean it is letting its guard down. Speaking to Bloomberg, Health Minister Enrique Paris attributed the country’s leadership in the ranking to two factors: the country’s successful vaccination campaign and the fact that it is now summertime in Chile, when there is less viral circulation.

Colombia

Health Minister Fernando Ruiz said that, in view of the advance of Omicron, Colombia will have to “take a series of measures and make recommendations to be able to deal with this new variant in the country and its effects”. He did not specify what types of measures will be taken to try to reduce the peaks of contagion, however.

Colombia’s largest minimum wage hike in 50 years is adding pressure on the central bank to raise rates faster and more widely before inflation spirals. At the same time, the government is considering plans to withdraw subsidies that have kept gasoline prices artificially low, which could provide an additional boost to inflation.

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Ecuador and Peru

As of January 1, citizens of the countries that make up the Andean Community of Nations (CAN, made up of Ecuador, Colombia, Peru and Bolivia) will no longer pay additional surcharges for international roaming services in a post-paid plan between their countries. From then on, when a citizen of any of the CAN countries is in the territory of the other three countries, the same conditions and rates will apply as in the country of origin for voice, SMS and data services.

Mexico

Mexico’s President Andrés Manuel López Obrador on Wednesday proposed carrying out a telephone survey in the event the electoral authority INE opts to not organize the recall vote due to insufficient budget. He said that the question could be: Do you want Andrés Manuel López Obrador to continue as president or resign, so the telephone survey would not take long, and could be complemented with a door-to-door consultation.