U.S. Markets Advance Ahead of Inflation Data; New Cabinet Boosts Peru Stocks

Arabica coffee prices have doubled over the past year amid drought in Brazil, supply chain issues and transportation costs

Pedro Castillo, Peru's president, left, and Dina Boluarte, Peru's new minister of development and social inclusion, wave during a swearing-in ceremony at the Government Palace in Lima, Peru, on Tuesday, Feb. 8, 2022. Castillo has repeatedly made changes to his cabinet since taking office, including naming his fourth prime minister in just over six months as he tries to restore stability after weeks of political turmoil. Photographer: Angela Ponce/Bloomberg
February 09, 2022 | 06:30 PM
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A roundup of Wednesday’s stock market results from across the region

🗽 On Wall Street:

U.S. stocks saw their second straight day of gains on Wednesday, but expectations are high ahead of Thursday’s inflation data, and which could show the sharpest increase since the early 1980s.

The S&P 500 extended the rally it kicked off on Tuesday, following losses on the first day of the week, and technology stocks recovered about half of their losses suffered this year. Despite fears of tighter monetary policy, companies’ quarterly reports have helped support the stock market’s gains.

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Some 76% of the 317 S&P 500 companies that have already reported results above estimates, and earnings came in nearly 6% above projected levels.

The S&P 500 (SPX) gained 1.45%, while the Dow Jones Industrials (INDU) rose 0.86%, and the Nasdaq Composite (CCMPDL) advanced 2.08%.

Investors will be watching for the release of the inflation data, as a reading above the 7.2% annual rate forecast could pressure the Fed to consider its first half-percentage point hike since 2000.

🔑 Key Highlights of the Day:

The morning coffee may become more expensive as the international price remains at decade highs.

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Arabica prices have more than doubled in the past year due to drought in Brazil, supply chain turmoil and transportation costs. To cope with the shortage, roasters have dipped into their inventories, bringing stocks monitored by the U.S. exchange ICE Futures to a 22-year low.

Stocks of high-end Arabica beans, a favorite of craft coffee shops and chains such as Starbucks (SBUX), totaled 1.07 million bags or about 143 million pounds, according to data released Monday by the exchange, the lowest level since February 2000.

Read More: Coffee Prices Hit Highest in Seven Years on Global Supply Threats

🥇 The Leader:

The Peruvian stock market led for the second consecutive day among its Latin American peers. The S&P/BVL Peru (SPBLPGPT) rose 1.30%, riding the momentum it received Tuesday following the announcement by Compañía de Minas Buenaventura (BUENAVC1) to sell its entire stake in the Yanacocha and La Zanja gold mines. The deal closed at $450 million.

The good performance of the stock market also came following the presentation of President Pedro Castillo’s new cabinet on Tuesday night. This is Castillo’s fourth cabinet since taking office last July, after Héctor Valer Pinto submitted his letter of resignation as cabinet leader following allegations of domestic violence.

The shares of Aenza (AENZAC1), Trevali Mining, Credicorp (CRECAPC1) and Southern Copper (SPCCPI1) were among the best performers of the day.

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The Mexican stock market also followed Tuesday’s performance and closed with gains of 0.89%. The Ibovespa (IBOV), the leading index of the largest stock exchange by market capitalization in Latin America, showed a similar mood, infected by the trend of the U.S. markets.

📉 A Bad Day:

The Colombian stock market closed with the worst performance in Latin America with the Colcap (COLCAP), its main index, closing with a drop of 0.99%. Two of the shares related to Grupo Empresarial Antioqueño were among the worst performers, as the Gilinski Group’s takeover bid for Sura (GRUPOSUR) and Nutresa (NUTRESA) shares is being accepted.

Grupo Argos’ (GRUPOARG) and Grupo Sura’s preferred stocks were among the worst performers of the day.

Fitch Ratings warned this week that the country would need additional measures to significantly reduce its debt indicators as of 2023. In addition, consumer confidence unexpectedly fell in January, to -13.5%.

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🍝 For the Dinner Table Debate:

The debate over cryptoassets and digital currencies is heating up, and entities such as the International Monetary Fund (IMF) are far from silent on the issue.

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Kristalina Georgieva, IMF managing director, said Wednesday there is no universal case for central bank digital currencies (also known as CBDCs), in remarks that also called on monetary policymakers to carefully weigh trade-offs as financial innovation enters a new phase.

Georgieva said CBDCs could boost financial inclusion in some countries, while providing a secure backstop for payment systems in others. However, she cautioned that their design must also take into account financial stability and privacy considerations.

Tobias Adrian, financial advisor in the IMF’s money and capital markets department, said developing economies could face the risk of their people adopting the digital currencies of foreign nations.

Read More: A $4.5 Billion Crypto Crime Stars an NYC Couple, Stolen Bitcoin and Rap