U.S. Stocks Tumble, Most LatAm Markets Advance

Big tech firms drag down Nasdaq 100, while Colombia and Argentina markets post losses

Americas Wrap
December 30, 2021 | 06:13 PM

U.S. stocks fell toward the end of Thursday’s session after a day of scarce activity, a day after the S&P 500 set its 70th record of the year with a moderate 0.14% hike, while big tech shares, including those of Apple and Microsoft, dragged down the Nasdaq 100 and the Dow Jones Industrial Average posted losses for the first time in seven days, breaking its longest streak of gains since March.

Gains were erased by a fall in the shares of cruise operators, including Carnival and Royal Caribbean Cruises after the CDC warned that such trips should be avoided, even by vaccinated passengers, amid the risk of Covid-19 contagion.

The yield on 10-year Treasury bonds dropped below its 50-day moving average, with the long-term rates suffering the sharpest drop, while the U.S. dollar moved a fraction.

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Labor demand remained solid despite the latest Covid wave, with unemployment having fallen unexpectedly last week to its lowest level since March 2020, while business activity in Chicago increased in December above levels predicted by economists.

“In general we have the Santa Claus rally, but these last few days can be pretty volatile”, Chris Gaffney, president of global markets at TIAA Bank, said in an interview. Managers can choose to ensure their gains, “but we are not seeing that this year”, he added. “The economic scenario, company fundamentals, remain solid”.

Latin America

Regionally, stock markets bounced back from Wednesday and ended the day with gains, except for Argentina and Colombia, with the former’s Merval index down 0.60% and Colombia’s Colcap down 0.34%. Chile’s Ipsa posted the strongest gains, of 1.37%, followed by Peru’s index, with 1.44%.

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Here is our summary of how the region’s markets performed Thursday:

Argentina

The country suffered two days of record Covid-19 cases, surpassing 50,000 over the past 24 hours.

The Health Ministry announced a further 50,506 positive cases, and 35 deaths, following Wednesday’s tally of 42,032 cases, the highest daily number since the start of the pandemic.

Brazil

Brazilian markets sustained a degree of optimism amid the lack of liquidity that is normal for the festive season and the outlook for economic recovery next year if expectations of less severity of the Omicron variant are confirmed.

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The real closed at 5.57 to the U.S. dollar, a drop of 2.3% amid the dispute among investors over the Ptax, an exchange rate used in the liquidation of types of contracts, including banks’ so-called ‘overhedge’.

The Ibovespa closed with gains, driven by the good performance by Vale’s shares amid a recovery of iron ore prices.

Chile

President Sebastián Piñera announced the presentation of the so-called ‘creche’ bill that aims to end labor discrimination of women that limits their access to the labor force, as Articule 203 of the Labor Code establishes that only companies with 20 or more female employees are obliged to provide a creche.

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Piñera also announced that the ‘Protege’ subsidy will be expanded, which provides economic assistance for the care of children under the age of two, until March 2022.

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Colombia

The country’s statistics agency DANE said unemployment in Colombia in November was 10.8%, a drop of 2.5 percentage points compared with the same month of last year. However, the figure was 9.3% in November 2019, meaning that it remains high.

Peru

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The Peruvian government and the Chumbivilcas communities reached an agreement regarding Las Bambas copper mine following hours of talks, according to RPP radio, with the government offering work in the mining corridor to the communities.

Mexico

The Bank of Mexico will issue digital currency in 2024, the government tweeted on Wednesday.

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The announcement was made a few hours before President Andrés Manuel López Obrador, in the presence of the central bank’s next governor, Victoria Rodríguez, said he would respect the bank’s autonomy, and hinted that he would follow economic growth more closely.

This is how the markets behaved on Thursday, December 30: