U.S. Markets See Best Day Since 2020; Brazil’s Ibovespa Leads LatAm Gains

Oil prices retreated after having surpassed $130 as investors keep their eyes on the war between Russia and Ukraine

A trader works on the floor of the New York Stock Exchange in New York, U.S. Photographer: Ramin Talaie/Bloomberg
March 09, 2022 | 05:55 PM
Reading time: 3 min.

A roundup of Wednesday’s stock market results from across the region

🗽 On Wall Street:

Appetite for risk returned to the world’s stock markets on Wednesday, to the point that in the United States they had their best day since 2020.

The fall in commodity prices, which reduced inflation concerns, and the door opened by Ukraine in its negotiations with Russia, put the brakes on the negative trend that has dominated the market since the war broke out two weeks ago.

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The S&P 500 rose 2.57%, its biggest advance since June 2020, while the Nasdaq Composite (CCMPDL) gained 3.60%, the best performance since November of that year, and the Dow Jones Industrials advanced 2%.

“It has been almost two weeks since Russia invaded Ukraine and it seems that traders are becoming a bit optimistic that a compromise could be reached after Ukrainian President Zelensky’s comment,” said Edward Moya, an analyst at Oanda.

The Ukrainian president said the country is open to discuss demands for neutrality and NATO membership, provided it is given security guarantees.

🔑 The Day’s Key Data:

Oil prices retreated, after surpassing $130 per barrel this week, as investors are attentive to the possibility of a breakthrough in negotiations between Ukraine and Russia.

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Brent fell 12% to $112.56, while WTI fell 11% to $109.62 per barrel.

Price behavior was also weighed by the fact that the United Arab Emirates and Iraq signaled that OPEC might be willing to increase production, amid the blockade on Russian exports.

“We are in favor of production increases and will encourage OPEC to consider higher production levels,” Yousef Al Otaiba, the UAE’s ambassador to Washington, said in a statement on Wednesday.

On a day when risk appetite returned, Bitcoin (XBT) climbed 8.6% to $41,854.03 at 16:01 New York time. Cryptocurrencies benefited from the executive order signed by President Joe Biden, in which he issued a series of measures to analyze the development of digital assets in the United States.

🥇 The Leader:

In Latin America, Brazil’s Ibovespa (IBOV), the main index of the largest stock exchange by market capitalization in Latin America, accompanied the rebound of most stock markets, following signals from Ukraine that it is willing to make concessions to stop the war in its territory.

The Brazilian index rose by 2.43%, thanks to the performance of sectors such as information technology, industrials and consumer commodities.

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Despite the international optimism, the domestic market is also closely following the Brazilian government’s moves in an attempt to contain the rise in fuel prices. According to news agencies, Planalto is studying a temporary subsidy to avoid an uncontrolled increase.

The Mexican stock market continued its positive performance and accumulated two consecutive upward sessions. The S&P BMV/IPC (MEXBOL) ended the day with a gain of 1.17%.

📉 A Bad Day:

Argentina’s Merval index (Merval) was the only one in the region to close with losses on a day marked by optimism in international markets.

The index fell by 0.95%, thus accumulating two sessions with losses so far this week, after yesterday’s rebound.

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The shares of Transportadora de Gas del Sur (TGSU2), Cresud (CRES) and Transportadora del Gas del Norte had the worst performance in the session.

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Investors are awaiting the agreement reached with the International Monetary Fund, which is now being discussed in Argentina’s Congress. Economist Miguel Kiguel warned Wednesday, in an interview with Bloomberg Línea, that “the IMF preferred a very lukewarm program that does not solve anything”.

🍝 For the Dinner Table Debate:

Six months since it became legal tender in El Salvador, Bitcoin has increased its penetration among the population, but its use as a means of payment in businesses has not become widespread, according to a report by Bloomberg Línea.

The official government app Chivo Wallet accumulated four million users in January, 61.5% of the country’s total population, according to figures managed by President Nayib Bukele.

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However, use of the largest cryptocurrency by market capitalization has been falling, according to a survey by the Chamber of Commerce and Industry. In November last year, 22% of businesses received payments with the digital token, but in February this year the figure fell to 14%.

In addition, 92% of respondents said their businesses had been indifferent to the impact of Bitcoin.