U.S. Markets’ Recovery Stalls; Ecopetrol Shares Fuel COLCAP Gains

Oil and grain prices rise amid fears the Russian assault on Ukraine will lead to supply shortages

Ecopetrol's refinery in Barrancabermeja, Colombia, on February 15, 2022.
March 23, 2022 | 06:31 PM

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

🗽 On Wall Street:

U.S. stock markets fell again on Wednesday amid the volatility generated by the lack of progress in a negotiated solution to the war in Ukraine, and the stance of the Federal Reserve, which now foresees a more aggressive policy to control the highest inflation in four decades.

The S&P 500 closed down 1.23%, while the Nasdaq Composite (CCMPDL) dropped 1.32% and the Dow Jones Industrials slid 1.29%.

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“We live in a world of macro uncertainty, increased volatility. And the Fed, like us, will have to watch the data,” Kristof Gleich, president and CIO of Harbor Capital Advisors, told Bloomberg News. “That’s going to cause even more volatility in the markets, because markets don’t like uncertainty.”

For his part, Edward Moya, an analyst at Oanda, added that uncertainty over geopolitical risk will continue to drive up energy prices and that will leave an unbalanced global growth picture that will “make it very difficult” for businesses.

🔑 The Day’s Key Events:

Commodity prices continue to take center stage as the war between Russia and Ukraine threatens to cut supplies of oil and grains.

The cost of crude oil rose again by more than 4%, after U.S. inventories fell. According to a report from the Energy Information Administration, U.S. crude oil stocks retreated by 2.51 million barrels last week.

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The market is also under more pressure. Storm damage at a Black Sea export terminal could reduce shipments to the European market by up to one million barrels per day.

Traders are keeping an eye on a deal to be reached between U.S. President Joe Biden’s administration and the European Union to reduce energy dependence on Russia. Biden’s national security adviser Jake Sullivan said a deal would be announced on Friday. It’s aimed at securing U.S. natural gas and hydrogen supplies for Europe, according to an official familiar with the plans who spoke to Bloomberg News.

🥇 The Leader:

The Colombian stock saw the best performance in Latin America for the second consecutive day, thanks to the behavior of oil prices. Main index COLCAP closed up 2.03%, driven by the performance of the energy, finance and consumer discretionary sectors. The performance was so good that it became the fourth best performing stock market in today’s session, worldwide.

The great protagonist continues to be Ecopetrol (ECOPETL) shares, which closed with a 5.09% increase and stood at highs not seen since 2019.

Brazil’s Ibovespa (IBOV) closed up 0.16%, driven by stocks linked to raw materials, such as oil, mining and steel.

📉 A Bad Day:

The Mexican stock market put in the worst performance among its Latin American peers, affected by the negative performance of the markets in the United States.

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The S&P BMV/IPC (MEXBOL) fell by 1.02%.

Shares of Gruma SAB (GRUMAB), Regional SAB (RA), Industrias Peñoles and Bimbo (BIMBOA) were among the worst performers on the day.

The second worst-performing index on Wednesday was Chile’s IPSA (IPSA), which closed with a drop of 0.96%. Despite a good performance in recent sessions, the index registered its second consecutive fall on Wednesday amid the nervousness generated by the approval in legislative debate of a new bill that will allow early withdrawals from pension funds.

🍝 For the Dinner Table Debate:

On April 1, the groups of the teams that will compete in the 2022 Qatar World Cup will be announced. For now, the sport’s governing body FIFA continues to prepare for the tournament to be held in November, and opened a new opportunity to buy tickets for the matches prior to the draw being made.

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With 15 of the 32 slots defined for the teams that will face each other at the World Cup, fans will be able to take advantage of this new “first-come, first-served sales period” and “complete their purchase immediately”, according to FIFA.

Although the modalities of ticket sales in this new phase are diverse, there are some standard prices for admission to the matches.