A roundup of Tuesday’s stock market results from across the region
🗽 On Wall Street:
U.S. stocks received with optimism Russia’s announcement that it will “drastically” reduce military activity near Kiev and Chernihiv, although their climb slowed a bit after Moscow clarified that this did not mean a ceasefire in the war that it launched more than a month ago in Ukraine.
However, the announcement was enough for the S&P 500 and the Dow Jones Industrials to achieve their fourth consecutive day of gains. In the case of the former, it managed a rise of 1.23% by closing above 4,600 points for the first time since mid-January, while the latter rose by 0.97%.
In the case of the Nasdaq Composite (CCMPDL), the index posted a 1.84% increase. Apple (AAPL) sealed its 11th day of gains, the longest winning streak for its shares since 2003.
“Headlines this morning reporting that Russia is calling for another round of talks, which started today being ‘constructive’, seem to be boosting the markets. Meanwhile, they continue to grapple with expectations that the Fed will get aggressive with its monetary policy tightening campaign to try to control elevated inflationary pressures,” financial services firm Charles Schwab said in a note.
🔑 The Day’s Key Events:
Oil prices had another day of falls, after the optimism generated by the talks between Russia and Ukraine, and at one point in the session they even traded below $100 per barrel.
Although the decline moderated as the hours passed after it was learned that there would be no ceasefire agreement, in the end the WTI and Brent benchmarks fell close to 1%. The progress in the negotiations came at a time when the price of oil is under pressure due to lockdowns in China to control a new wave of Covid-19.
The lockdowns put the market at risk in the face of pressures from one of the world’s most crude-demanding countries, adding to the fact that OPEC+ does not plan to vary the pace at which it is restoring the oil supply it cut to address the low prices seen during the height of the pandemic.
The price of gold, a safe-haven asset in times of crisis, also retreated and fell below $2,000 per ounce. “For a moment, it looked like the biggest geopolitical risk might be poised for a major de-escalation and the safe-haven trade was quickly abandoned. Gold will hold the $1,900 level until it is confirmed that Russia withdraws troops,” said Edward Moya, senior market analyst at Oanda.
🥇 The Leader:
Brazil’s Ibovespa (IBOV) had the best performance in the region on Tuesday, also buoyed by the optimism generated by the Russia-Ukraine talks.
The gains came even on a day when oil prices fell following the news out of Eastern Europe.
The IT, consumer discretionary and healthcare sectors were among the best performers on the day.
Petrobras (PETR3; PETR4) shares also rose on Tuesday, after the government announced on Monday the departure of the company’s chairman, Joaquim Silva e Luna. Adriano Pires, founding partner and director of the Brazilian Infrastructure Center, will take his place.
The S&P BMV/IPC (MEXBOL) closed with a rise of 0.77% and together with the Ibovespa and the Colombian Colcap were the Latin American indices that posted gains.
📉 A Bad Day:
Argentina’s Merval (MERVAL) once again had the worst performance in Latin America, for the second consecutive day in the week. The main index of the Argentine stock exchange was negatively affected by the behavior of shares related to raw materials, on a day in which they slipped in view of the progress in the negotiations between Russia and Ukraine.
Specifically, shares of Cresud (CRES), Pampa Energía (PAMP), Sociedad Comercial del Plata (COME) and Transportadora Gas de Norte were among the worst performers of the day.
In the local arena, the news is moving between the rupture within the Frente de Todos, the ruling coalition, after the signing of the agreement with the International Monetary Fund (IMF), and the attempt of the government of President Alberto Fernández to control inflation.
On Tuesday the President asked, before trade unionists and businessmen, for an “opportunity for dialogue”, and quoted the British songwriter John Lennon, who “asked for an opportunity for peace”, to “find a joint solution” to Argentina’s inflationary problems.
Referring to the acceleration of prices, the president was also critical of his own government: “To a great extent, it is our problem. It is true that inflation is complicated by the international scenario, but yesterday we were talking with Martin [Guzman, Minister of Finance] and of the 50 points of inflation that Argentina has had, there must be 10 that have to do with the war and the international context, but there are 40 that are ours”.
🍝 For the Dinner Table Debate:
Inflation has become one of the main problems of 2022 and consumers’ pockets are suffering from rising prices in practically every country in the world, as food is becoming more expensive. In this context, people are beginning to change the way they eat, amid a scenario that has been exacerbated by the war in Ukraine, which has put two of the main producers of wheat, fertilizers and cereals in check.
Prices for commodities such as bread, meat and cooking oils have risen around the world, hitting commodity markets and damaging the global food system, Bloomberg News reported. Specifically, the attack on Ukraine further roiled the global crop trade and drove prices of the two most common oils, palm and soybean, to record levels.
There are cases such as the Ivory Coast Bakery Entrepreneurs Organization, which announced that it intends to reduce the weight of a baguette, whose price is fixed by law, due to the rising cost of wheat because of the war in Ukraine. It suggests 150 instead of 200 grams, the current approved weight, it said in a statement Friday.
In addition, the war is also exacerbating a record increase in fertilizer prices, which will only make food more expensive. For example, Brazilian farmer Zilto Donadello plans to reduce fertilizer applications by 30% to 50% in the next soybean crop, which will likely result in lower yields.
