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Fed Meeting Minutes Spook U.S. Investors; Chile and Peru Post Gains

The Nasdaq Composite suffered a 3.34% fall as tech shares continue to slide, while Brazil’s Ibovespa put in LatAm’s worst performance

Americas Wrap
January 05, 2022 | 06:14 pm

Bloomberg Línea — The minutes from the December meeting of the Federal Open Market Committee (FOMC), published Wednesday afternoon, spooked U.S. markets amid signs of a more aggressive stance on raising interest rates, with the markets subsequently ending the day’s trading with losses.

The minutes revealed that, given the performance of the economy, the labor market and inflation, it “may be warranted” to raise benchmark rates at “a faster pace” than previously anticipated. Although there was no indication of when this tightening might begin, after the end of the December 14-15 meeting officials were unanimous that that they would have to start raising rates as soon as this year.

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Investors expect rate rises to begin in March, according to Bloomberg.

The S&P 500 (SPX:IND) closed down 1.9%, while the Dow Jones (INDU:IND) slid 1.07%. The Nasdaq Composite (CCMP:IND) was the worst performer, plunging 3.34%, as technology stocks continue to fall. The Nasdaq 100 (NDX:IND), which groups together the sector’s largest companies, plunged 3.1%.

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“The fact that FOMC participants are talking about faster and more aggressive rate hikes, coupled with a faster pace of balance sheet normalization than in recent hikes, indicates that the Fed’s bet on the stock market has been repriced to the downside,” Cliff Hodge, chief investment officer at Cornerstone Wealth, told Bloomberg.

Latin America

In Latin America, the Peruvian stock exchange (SPBLPGPT:IND) led the gains for the second consecutive day, after gaining 1.26% during the session, with shares linked to the mining sector again the best performers.

The Chilean stock exchange (IPSA:IND) was the only other exchange to post gains, with a rise of 0.53%. The information technology, communication services and finance sectors bolstered the Chilean market’s performance.

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Brazil’s Ibovespa (IBOV:IND) was the worst performer among the countries in the region, with a fall of 2.42%, mirroring the pessimism generated among the market after the change in tone of the U.S. central bank.

Following is a roundup of news from across Latin America on Wednesday:

Argentina:

  • Economy Minister Martín Guzmán met with governors and representatives of the country’s provinces to explain details of the latest meeting with the International Monetary Fund, prior to any agreement being debated and approved by Congress. Accompanied by President Alberto Fernández and the cabinet chief Juan Manzur, Guzmán said “the core aspect, the point on which there is no agreement today, is the fiscal path”,
  • In 2021, new rental contracts accumulated a year-on-year price increase of 52.8%, according to a report by ZonaProp, a record rise that is above the accumulated inflation of the first eleven months of the year (51.2%).
  • The Government stipulated a new basket of prices to be controlled, and which include around 1,300 products, to assist households with rising inflation.

Brazil:

  • The traditional chaos that punishes passengers during the high travel season, with flight delays and cancellations, increased with the turn of this new year, with the country’s two main airlines Gol and Latam both recording incidents involving their aircraft in recent days.
  • President Jair Bolsonaro was discharged from hospital Wednesday after doctors removed the nasogastric tube that was helping him with feeding. Bolsonaro had been hospitalized with abdominal pains that are a consequence of being stabbed during his presidential campaign in 2018.

Chile:

  • The Convention that will draft Chile’s new Constitution elected its new president, María Elisa Quinteros, on Wednesday, after Mapuche academic Elisa Loncón completed her term of office.
  • Chilean environmental authorities have approved an alternative tailings disposal project involving an initial investment of $448 million at the Centinela copper mine in the north of the country.

Colombia:

  • COOs and CFOs are among the highest paid senior executives in 2022 in Colombia as certain positions gain or lose relevance “with this organizational metamorphosis,” the Remuneration Study 2022 Latam, by Page Executive, has found.
  • Colombian agricultural exports recorded their best result in history in the first 11 months of 2021, totaling $8.4 billion.
  • Bancolombia’s NowCast index (BCOLO:CB) estimates that the Colombian economy would have grown 8.6% in the last three months of 2021.

Mexico:

  • Trafigura Group resumed operations in Mexico after the country’s President Andrés Manuel López Obrador’s accusations of fuel smuggling caused some companies in the country to suspend their relations with the commodities trading firm.
  • President López Obrador revealed Wednesday that Mexico lost 312,902 formal jobs registered with the Mexican Social Security Institute in December.
  • Lyft (LYFT:US), the U.S. app-based ride-hailing app, began recruiting personnel in Mexico, which could be a clue that the Uber rival is preparing to expand its operations into the country.

Peru:

  • During a cabinet meeting on Wednesday, the Peruvian government decided to change the alert level for different provinces in the country in line with the accelerated increase of Covid-19 cases nationwide.
  • Peru’s strong economic performance is shoring up the position of Economy and Finance Minister Pedro Francke ahead of possible cabinet changes, according to Prime Minister Mirtha Vásquez.

Venezuela:

  • The National Assembly, headed by Juan Guaidó, and Parliament, where President Nicolás Maduro’s supporters have a majority, reconvened on Wednesday. During an address on Tuesday night, prior to the start of the legislative calendar, Maduro called for “the lid to be lifted off the rotten pot of the early start of the opponents” in Guaidó's parliament.

This is how the region’s stock markets and currencies performed on Wednesday, January 5: