S&P 500 Sees Best Week Since 2020; Mexico Tops LatAm Gains

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

🗽 On Wall Street:

U.S. stock markets closed the week with gains, driven by the performance of technology stocks, amid a volatile week in which the speech by Federal Reserve Chairman Jerome Powell and events in Ukraine weighed on the market’s mood.

The S&P 500 rose 1.17%, while the Nasdaq Composite (CCMPDL) gained 2.05%, and the Dow Jones Industrials, meanwhile, advanced 0.80%.

The four-day rally meant the S&P 500 closed with its best week since November 2020.

During the day, Chinese leader Xi Jinping assured U.S. President Joe Biden that his country does not want a war in Ukraine, in the first conversation the two leaders have had since the Russian invasion began.

“Along with the Fed’s clarity, we have also seen commodity prices stabilize a bit after their parabolic move higher over the past two weeks,” wrote Art Hogan, chief market strategist at National Securities, in a note seen by Bloomberg.

🔑 The Day’s Key Events:

Oil prices stabilized above $100 per barrel, while no concrete progress has been made in the negotiations between Russia and Ukraine.

The International Energy Agency (IEA) warned that oil markets are in an “emergency situation” that could worsen, days after stating that the potential loss of Russian oil exports “cannot be underestimated”. The IEA even proposed that the world could ease oil shortages caused by Russia’s invasion of Ukraine by restricting the use of automobiles.

“Oil markets are in an emergency situation. And not only that, it may even get worse in the coming months,” IEA executive director Fatih Birol told a press conference.

According to the IEA, the world’s advanced economies could reduce their daily oil demand by 2.7 million barrels within four months if the proposed plan is followed.

🥇 The Leader:

The Mexican stock market (MEXBOL) led in Latin America, with the S&P BMV/IPC closing up 2.03%.

The financial, materials and healthcare sectors were the best performers on the last day of the week.

Shares of Grupo Carso (GCARSOA1), Grupo Financiero Banorte (GFNORTEO) and Grupo Financiero Inbursa (GFINBURO) were among Friday’s best performers.

Brazil’s Ibovespa (IBOV) was the second best performer, gaining 1.98%.

Brazil’s unemployment rate fell to 11.2% in the quarter ended January 2022, the lowest rate for the period since 2016. According to the Brazilian statistics agency IBGE, 12 million workers were unemployed in the period, a decrease of 6.6% during the same comparative period, representing a reduction of 858,000 people out of work.

📉 A Bad Day:

Argentina’s Merval (MERVAL) had the worst performance among its Latin American peers, after two upward sessions amid the approval of the bill that endorses the agreement with the International Monetary Fund.

The stock index fell by 0.66%. In spite of the approval of the bill by Congress, which nevertheless exposed a rift within President Alberto Fernandez’s government.

The bill was approved with 56 votes in favor, 13 against and 3 abstentions, and with Vice President Cristina Kirchner absent for almost the whole day.

The 13 legislators of the Frente de Todos who rejected the agreement, and who support the vice president, expressed their disagreement with the IMF deal in a statement. “This artificial crossroads to which this intends to submit us, if accepted, would become a defeat, not only for the people who will suffer the consequences of this deal, but it will also become a defeat for politics”, the statement read.

🍝 For the Dinner Table Debate:

Latin America’s commercial aviation sector has undergone changes in recent years, and low-cost airlines have been gaining airspace as a result of their business model of lower operating costs, specific routes that do not always stop in capital cities, and fewer amenities on flights.

Low-cost airlines have become so important in the region that a study by the Center for Aviation (CAPA) shows that, by 2019, low-cost airlines already controlled a higher percentage of domestic flights in Brazil and Mexico, compared to traditional carriers.

More affordable tourism has been the key for these airlines to establish themselves in different countries in the region such as Mexico, Brazil, Colombia, Chile and Argentina, to mention a few; to such an extent that traditional airlines have had to adapt their offer to cover a larger number of passengers.

It is estimated that this ‘niche’ market in Latin America will reach sales of US$13 billion in the next five years, according to Euromonitor.