U.S. Markets See Worst Monthly Loss Since Pandemic Outbreak; Argentina’s Merval Leads LatAm Gains

A roundup of the region’s stock market results on Monday:

🗽 On Wall Street:

If January is the month that sets the tone for the rest of the year, a year full of volatility in the world’s stock markets could be upon us. Despite the fact that on the last day of the first month of the year the three main U.S. indexes closed with gains, the monthly balance was not the best.

The S&P 500 (SPX) and the Nasdaq Composite (CCMPDL) ended January with a loss of more than 5%, the sharpest loss since the beginning of the pandemic in March 2020, while the Dow Jones Industrials slid more than 3%.

The markets traded in January against the backdrop of the uncertainty generated by the Federal Reserve, after it tightened its monetary policy discourse, and with which it is expected to begin raising interest rates in March. Inflation in the United States, which closed last year at its highest level since 1982, forced the central bank to normalize benchmark rates sooner than expected.

🔑 Key Data from Monday:

Benchmark Brent crude oil looks like it could be headed for $100 per barrel, trading above $91 in Monday’s session. The geopolitical conflicts, pending what happens this week between the West, Ukraine and Russia, and a shortage in the supply of crude oil have underpinned prices.

Oil price performance was so positive in January that it was the biggest monthly increase in at least 30 years, according to data compiled by Bloomberg. In the first month of the year alone, oil gained 17%.

Supply has not kept pace with demand, which was not affected by the Omicron variant, due to the fact that the Organization of Petroleum Exporting Countries (OPEC) and its allies have not been able to fully comply with the production increases planned in recent months.

🥇 The Leader:

Monday was not a bad day for Latin American market, with the region’s main stock exchanges closing with gains. The Argentine index (MERVAL) had the best performance during the last session of January, chalking up five consecutive days of gains, having ended with positive results last week following the government’s announcement of an agreement in principle with the International Monetary Fund over its $40 billion debt.

In an informal meeting last Friday, the staff of the Washington-based lender informed the board of directors about the progress in the negotiations with Argentine, and said that the nation aims to reduce energy subsidies.

Business leaders from different sectors supported the understanding, considering it an “opportunity for the growth of the country’s productive sector” and will be “fundamental” for access to financing.

“After Friday’s announcement of the agreement in principle with the International Monetary Fund and the confirmation of the payment of the maturities with the organization, the market reacted positively with increases that in some cases exceeded 7%, both in bonds and shares,” said Fernando Staropoli, an executive at Rava Bursátil.

Brazil’s Ibovespa (IBOVESPA), Latin America’s largest stock market by market capitalization, recovered during the session despite trading with losses for hours as the market seeks to adjust between the interest rate decision in Brazil on Wednesday and the release of U.S. employment data measured by payrolls on Friday.

🍝 For the Dinner Table Debate:

Sony (SONY) announced it will buy Bungie, the U.S. video game developer behind the popular Destiny franchise, for $3.6 billion to bolster its suite of game creation studios.

The deal announced Monday is the third major video game acquisition unveiled this month, following Microsoft’s (MSFT) purchase of Activision Blizzard (ATVI) for $69 billion two weeks ago, and that of Take Two Interactive (TTWO) by mobile gaming leader Zynga (ZNGA) on January 10.

The purchase of Bungie will give Sony one of the most popular first-person shooter games to compete with the huge Call of Duty series, which Sony’s main rival now owns through Activision.