‘Santa Claus Rally’ Ends on a High; Mining Stocks Drive Peru Gains

The five last trading days of 2021 and the first two of 2022 saw the S&P 500 gain 1.4%, while Peru led the gains in LatAm

Americas Wrap
January 04, 2022 | 06:12 PM

Bloomberg Línea — Despite the mixed performance of U.S. markets in Tuesday’s trading, with tech shares dragging down the Nasdaq Composite, the so-called Santa Claus Rally ended with gains for investors, with the S&P 500 (SPX:IND) up 1.4%, but which closed trading down 0.06% on Tuesday.

The Dow Jones Industrial Average (INDU:IND) gained 0.59% and continued at a record high, while the Nasdaq Composite (CCMP:IND) dropped 1.33%, weighed down by a fall in technology shares amid fears that a rise in interest rates will devalue their profits, according to Bloomberg.

“The yield on 10-year Treasury bonds is on fire and that could affect confidence in growth shares, especially the expensive ones, such as technology,” Mike Bailey, research director at FBB Capital Partners, told Bloomberg.

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Latin America

In Latin America, Peru’s stock market (SPBLPGPT:IND) led the gains with a rise of 1.88% as mining sector shares had the best performance, with Sociedad Minera El Brocal (BROCALC1:PE), Trevali Mining Corp (TV:PE) and Minsur (MINSURI1:PE) the top three performers during Tuesday’s trading.

Mining got a breather this week as the government of Peru and the Chumbivilcas communities reached an agreement regarding the Las Bambas copper mine, which is operated by Chinese company MMG and produces 2% of the world’s copper.

Colombia’s Colcap index (COLCAP:IND) had the second-best performance in the region, with a 0.62% gain, driven by the public services and energy sectors.

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Brazil’s Ibovespa (IBOV:IND) has the worst day for indices in the region, closing 0.39% lower as investors eye the panorama abroad, amid the advance of the Omicron variant of Covid-19, discussions on interest rates and the performance of oil prices.

Here are the headlines and market performance of the region’s main economies on Tuesday:

Argentina:

  • Consumers will be facing price increases this month, while analysts are foreasting inflation of 52.1% for the year. Sectors such as telecommunications, Buenos Aires highway tolls and tax payments are among those that will rise.

Brazil:

  • XP (XP:UN) closed a deal to buy a minority stake in Grupo Suno, which has a share analysis division, a resources management company and the website Financial Status Invest. The transaction, the value of which was not disclosed, came after six months of negotiation. Suno founder Tiago Reis will remain as the company’s majority shareholder.
  • Brazilian commercial aviation begins 2022 with the country’s fourth-largest carrier on the verge of bankruptcy and thousands of passengers financially affected due to the interruption of services by ITA (Itapemirim Transportes Aéreos) on December 17.

Chile:

  • Growing opposition to new lithium contracts in Chile is the latest indication of how difficult it will be for the world to produce the building blocks of the clean energy transition. Previously, these efforts would have met little resistance, but politics, as well as environmental and social sensitivities, have changed.
  • A spending bill associated with Chilean President Sebastián Piñera’s guaranteed universal pension plan is likely to weaken the country’s fiscal accounts and increase public debt, LarrainVial economists Leonardo Suárez and Javier Salinas said in a note.

Colombia:

  • The Gilinski family will not extend their takeover bid for Grupo Sura (GRUPOSUR:CB). Sources close to the family told Bloomberg Línea that if they do not obtain 25.34% of Sura and between 30 and 40% of Nutresa (NUTRESA:CB), the deal will not progress.
  • The country’s Treasury announced Tuesday that 15 entities will participate in the ‘Market Maker’ program for public debt securities for 2022. Of this total, one is a new participant.
  • The Ministry of Housing informed Tuesday that there will be adjustments in the amounts of state subsidies, following the increase in the minimum wage for 2022.

Ecuador:

  • Household spending is driving the Ecuadorian economy, which is confirmed by figures presented by the Central Bank of Ecuador that show such spending contributed the most to year-on-year GDP growth in the third quarter of 2021, with 6.7%.
  • As of Tuesday, Ecuadorian entrepreneurs will be able to access loans at 1% interest in amounts ranging from $500 to $5,000 for a 30-year term, and which was a campaign pledge of President Guillermo Lasso.

Mexico:

  • For the National Energy Control Center (Cenace), Mexico’s most serious electricity problem is the excess of wind and solar technology installed without planning. In three years, the country’s renewable energy portfolio has grown 300%, says Ricardo Mota Palomino, general director of the Mexican electricity system operator, in an interview with Bloomberg Línea.
  • Digital invoicing, that defines the roadmap of the country’s tax authority SAT, will evolve to a more robust version for tax audit activity, which will provide the SAT with more detailed information on the identity of taxpayers, the dependency said.
  • The next few days will be crucial for Grupo Aeroméxico (AEROMEX*:MM), one of the country’s largest airlines, as creditors will decide on a restructuring package as part of its Chapter 11 insolvency proceedings.
  • State oil company Petróleos Mexicanos recorded the second consecutive drop in its crude oil refining during November 2021, according to the company’s most recent data. The company refined 732,400 barrels of oil per day, 1.2%, or 10,000 barrels, less compared to October’s figure.

Panama:

  • Panama’s hotel industry had one of its worst years in history, registering an occupancy rate of 37%, a situation attributed mainly to the effects of the pandemic.

Venezuela:

  • Venezuelan opposition parties extended Juan Guaidó's mandate as head of the country’s presidency, but with more limited powers, dealing a blow to the U.S.-backed effort to put pressure on President Nicolás Maduro.

This is how the region’s markets and currencies performed on Tuesday, January 4: