The results of Thursday’s trading in the region’s stock markets
🗽 On Wall Street
The jitters persist in U.S. markets, with volatility such that indexes went from early gains to close the day with losses, with the Nasdaq 100 (NDX), which features the main technology sector shares, accumulated a 10% drop from is November highs.
The Nasdaq Composite (CCMPDL) closed the day with a drop of 1.30%, while the S&P 500 (SPX) slid 1.10%. The Dow Jones Industrial (INDU), which has been affected by a bad start to corporate results season, dropped 0.89%.
Although the selloff of Treasury bonds appears to be taking a break, the expectation that the Federal Reserve will take a more aggressive stance on interest rates, to the point that it could raise them four or five times this year, continues to play against technology stocks, which are more sensitive to increases in benchmark rates.
“There has definitely been a lot of volatility on the market, and the biggest contributing factor to this has been the Fed’s big turnaround,” Anastasia Amoroso, head investment strategist at iCapital, told Bloomberg by telephone.
🔑 Key Points of the Day:
Oil prices dipped from their 2014 high and the benchmark Brent edged away from the the $89 per barrel mark after U.S. crude stockpiles rose slightly. The Energy Information Administration reported that crude stocks rose by 515,000 barrels in the week to January 14, to 413.8 million barrels.
In addition, President Joe Biden, during a press conference on Wednesday night, pledged to drive crude oil prices down to not affect consumers at the gas pumps.
“I think that’s the place where most middle-class people, working-class people get hit the hardest,” Biden told reporters. “They pull up to a station and all of a sudden, instead of paying $2.40 a gallon, they’re paying $5 a gallon. That’s going to be very difficult.”
🥇 The LatAm Leader:
Argentina’s Merval (MERVAL) was the best performing index in Latin America, with a rise of 1.91%, after ibeing influenced by the good mood of the U.S. markets, but before the change in trend that caused the US stock markets to close with losses.
The stock market recovered from the bad start of the week, after closing in the red on Monday and Tuesday, thanks to the strong performance of stocks such as Telecom Argentina (TECO2) and Cresud (CRES), which recorded the highest growth.
“The local market was infected by the optimism with which the U.S. market opened and the assets of the leader board ended mostly higher, without knowing the subsequent bad outcome of the New York market,” wrote Priscila Bruno, analyst at Rava Bursátil, in an analysis piece.
However, investors continue to pay close attention to the negotiations between the Argentine government and the International Monetary Fund, to which a maturity of almost $3 billion is due in March.
Brazils Ibovespa (IBOV), the region’s largest stock exchange by market capitalization, posted the second-highest gains of the day, with an advance of 1.01%.
📉 A Bad Day:
The main index of the Colombian stock market accumulated two sessions of losses after having started the week with the boost it was given by two takeover bids launched by the Gilinski Group for companies of Grupo Empresarial Antioqueño. During the week, the COLCAP saw its best day in almost two years, but has now retreated as investors took advantage of the wave to take profits.
The stock index closed with a 2.23% drop, with Bancolombia (BCOLO) shares, which fell from year-to-date highs, the hardest hit of the day. By sectors, the energy and financial sectors were the ones that accumulated the largest declines.
🍝 For the Dinner Table Discussion:
Mexico may have entered a recession, or at least that is what the first signs of economic activity in December indicate. With the economy contracting in the last quarter of 2021, predicted by a growing number of institutions including Bank of America, Banco Bilbao Vizcaya Argentaria and Bloomberg Economics, the country would have completed two consecutive quarters of GDP contraction, slowed the recovery since the onset of the pandemic.
Data released this week by the country’s statistics agency INEGI projects that economic activity retreated 0.2% last month, which would mean it fell in two of the last three months of 2021.
Last week, the Economic Commission for Latin America and the Caribbean (ECLAC) reported that it expects the region to slow its growth rate to 2.1% this year, after growing 6.2% on average last year. For the Mexican economy, it estimated growth of 2.9% this year.