U.S. Markets Close Higher; Argentina’s Merval Sees Second Sharpest Drop of the Year

Oil breaks through the $100-per-barrel barrier as Russia invades Ukraine

Traders working at the New York Stock Exchange (NYSE).
February 24, 2022 | 06:30 PM

A roundup of the region’s stock market results on Thursday

🗽 On Wall Street:

U.S. stock markets closed with gains on Thursday after a day full of volatility, following Russian President Vladimir Putin’s decision to invade Ukraine, which tumbled practically all markets equally.

However, after U.S. President Joe Biden’s speech, in which he announced more sanctions on the Kremlin, the three main Wall Street indexes managed to turn around the negative trend and closed with gains.

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The Nasdaq Composite (CCMPDL) rose by 3.35%, while the S&P 500 gained 1.50%. The same trend was seen in the Dow Jones Industrials, which closed up 0.28%.

The measures announced by Biden target the infrastructure of the Russian financial system. In addition, there will be additional bans related to new debts and shares of major Russian state-owned companies and private institutions. “This will fundamentally jeopardize Russia’s ability to raise key capital for its acts of aggression,” the U.S. president said.

“It’s important to know that major geopolitical events in the past used to be short-term market problems, especially if the economy was on solid footing,” Ryan Detrick, chief market strategist at LPL Financial, told Bloomberg.

🔑 The Day’s Key Events:

Commodities were once again the protagonists of the day, with oil surpassing the $100 barrier, after the Russian invasion of Ukraine increased concerns about a possible blow to the supply of crude oil, at a time when demand has not reacted at the same pace as the reactivation of economies.

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Gold, the safe-haven asset by nature, also showed bullish behavior and during the day touched a 15-month high.

Bernard Dahdah, senior commodities analyst at Natixis, said in a note that it is expected that gold prices will rise above $2,000 an ounce if the conflict escalates further in the coming days.

The metal’s performance was decoupled from how the world of cryptocurrencies, which plunged from the moment the Russian president announced the advance on Ukraine, kicked off.

Despite this, on par with traditional assets, after Biden’s speech, Bitcoin (XBT) began to show gains and advanced 3.1% to $38,737.91 at 15:29 New York time.

🏅 The Leader:

The Ipsa (IPSA), the main index of the Chilean stock market, managed to break away from the losses that occurred in most markets of the region, although it traded in losses for most of the session, but ended the day with a gain of 0.55%.

The shares of CMPC (CMPC), Cencosud (CENCOSUD) and Sociedad Química y Minera (SQM/B) were the best performers on the day.

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The materials sector, the energy sector and basic consumer goods were the positive drivers of the index’s performance.

“In the local market, the Ipsa reversed the strong initial fall and finally closed with a rise of 0.55% to 4,399.60 points, decoupling itself from the global markets, driven by the shares of raw materials such as SQM and CMPC,” Renta 4 analysts said.

The Mexican stock market also closed with gains, in line with the recovery of the US stock markets, and the S&P BMV/IPC (MEXBOL) gained 0.18%.

📉 A Bad Day:

Argentina’s Merval (MERVAL) was the worst-performing index among Latin American stock exchanges on Thursday, adversely affected by the performance of international markets and after it failed to feel the effect of the sanctions announced by the U.S. government.

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Argentina’s main stock market index fell by 2.89%, the second-sharpest setback it has registered in the year.

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“Argentine stocks were similarly affected by the conflict and joined the general market declines. The standouts were the banks, which fell by up to 4%,” said Gissela Avenia, an analyst at Rava Bursátil.

Brazil’s Ibovespa (IBOV), the leading indicator of the largest stock exchange by market capitalization in Latin America, closed with a loss of 0.37%.

🍝 For the Dinner Table Debate:

Latin American governments have shown divisions in their positions following Russia’s invasion of Ukraine.

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One of the most forceful positions once the attack took place was issued from Brazil, where Vice President Hamilton Mourao assured that “there has to be a real use of force in support of Ukraine”, in order to prevent Russia from advancing beyond that country.

Gabriela Cerruti, spokesperson of Argentine President Alberto Fernandez, shared with the media a communiqué from the Foreign Ministry regarding the conflict, stating that Argentina “firmly rejects the use of armed force and deeply regrets the escalation of the situation generated in Ukraine”.

Other governments in the region, such as Colombia, Ecuador and Mexico, have also expressed their position along the same lines.

The countries most sympathetic to Vladimir Putin’s policies have expressed their support from the region. Cuba, for example, said in recent hours that the United States has been threatening Russia for weeks, manipulating the international community.