U.S. Markets Start Week With Losses; Colombia’s COLCAP Leads LatAm Gains

Oil prices continue to slip, with the two main reference types dropping below $100

An attendee photographs signage on the floor of the New York Stock Exchange (NYSE) in New York, U.S. Photographer: Michael Nagle/Bloomberg
April 11, 2022 | 07:25 PM

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

🗽 On Wall Street:

U.S. stock markets began the week with losses as investors continue to pay close attention to the effects of global inflation and the tightening of monetary policy by central banks.

The S&P 500 fell 1.69%, while the Nasdaq Composite (CCMPDL) retreated 2.18% and the Dow Jones Industrials followed the same trend, falling 1.19%.

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Ten-year U.S. Treasury yields rose to above 2.75% for the first time since March 2019.

“U.S. stocks fell as the bond market sell-off continued, as investors were concerned about aggressive monetary tightening by the Federal Reserve, while China continues to struggle with its latest bout of Covid,” said Edward Moya, an analyst at Oanda.

He added that Wall Street is worried that inflation will eventually destroy all the growth potential that was supposed to occur this year, something that has already been hinted at in forecasts delivered by everyone from Goldman Sachs to the World Bank.

The International Monetary Fund is expected to reveal its growth estimates next week, although in past analyses it has already said that economic expansion will slow down, amid the war between Russia and Ukraine and the rising cost of living.

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🔑 The Day’s Key Events:

Oil prices continued their downward trend and the two main references fell below the $100 mark, in the midst of the strict lockdowns in China, stymying demand.

On Sunday, 26,087 new infections were reported daily in Shanghai, an all-time high. The surge in cases has disrupted port operations and prompted some refineries to cut crude processing rates, Bloomberg News reported.

For John Kilduff, co-founder of Again Capital, this outlook is “truly changing the market calculus that was so concerned about the adequacy of supply from Russia.” And more so at a time when there is no sign that Russian crude exports are declining.

🥇 The Leader:

Colombia’s COLCAP index broke away from its Latin American peers and closed with gains, in a session marked by losses across most of the region.

The Colombian stock market rebounded in the last hours of the session and ended Monday with an increase of 0.33%. Despite the behavior of oil prices, the financial and utilities sectors drove the index upward.

Shares of Promigas (PROMIG), Bancolombia (BCOLO) and Banco de Bogotá (BOGOTA) were among the best performers of the day.

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Broker Davivienda Corredores updated its target price for Bancolombia’s common stock from $39,400 (around $10.54) to $44,200 (around $11.82) per share.

📉 A Bad Day:

Latin America’s stock markets fell in line with the U.S. markets, with the Argentine Merval index (MERVAL) closing with the worst performance of all, down 1.59%. Argentina’s grain transporters’ union, the Federación de Transportistas Argentinos, began a national strike on Monday with a high level of compliance to demand an update in grain freight rates, in view of the increases in diesel and the lack of fuel supply.

Brazil’s Ibovespa (IBOV) fell 1.16%, with performance marred by pessimism in the international stock markets and the fall in oil prices, and the same happened with the Mexican stock market, where the S&P BMV/IPC (MEXBOL) dropped 0.41%.

🍝 For the Dinner Table Debate:

Speculation about Elon Musk’s plans for the future of Twitter (TWTR) linger after Sunday’s announcement that he would not be joining the company’s board of directors.

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With this decision, the world’s richest entrepreneur can now acquire additional shares in the social network as, by not joining the board, Musk is no longer subject to an agreement to keep his stake at no more than 14.9%.

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According to a filing with the Securities and Exchange Commission (SEC), Musk has “no current plans or intentions” to acquire additional shares, but “reserves the right to change his plans at any time” in light of the evaluation of various factors, including the stock price and the “relative attractiveness of alternative business and investment opportunities”.

The filing also said Musk may engage in discussions with the board about possible business combinations and strategic alternatives. In addition, it said that he may express his views to the board “or to the public through social media or other channels”.