A roundup of Friday’s stock market results from across the region
🗽 On Wall Street:
The effect of Fed chairman Jerome Powell’s speech, during a panel organized Thursday at the spring meetings of the International Monetary Fund, is still being felt in the stock markets and that was the main reason why the stock indexes closed with losses and accumulated their third weekly fall.
The blow was such that the S&P 500 fell 2.77%, the worst performance since March, as did the Nasdaq Composite (CCMPDL), which lost 2.55%, while the Dow Jones Industrials continued the trend and retreated 2.82%, sealing its worst day since 2020.
Investors again bet on an even tighter stance from the U.S. central bank. Powell said he expects a 50 basis point hike to be discussed at the next meeting in May and insisted they are “really committed” to controlling the highest inflation in decades.
“The economy is very strong, as is the labor market, but both can only take so much tightening in a short period and we may soon be able to see if the Fed has left too much undone,” reckoned Craig Erlam, senior analyst at Oanda.
🔑 The Day’s Key Events:
Oil prices closed with their third weekly decline as China’s hardline policy to control Covid-19 continues to raise concerns about crude demand.
Fuel consumption in the Asian giant, the world’s biggest crude importer, is expected to fall 20% in April from a year earlier, according to people with inside knowledge of the country’s energy industry consulted by Bloomberg News.
That drop is equivalent to a decline of 1.2 million barrels per day, the biggest hit to demand since the Wuhan shutdown more than two years ago, when the city became the epicenter of the coronavirus pandemic.
Economists surveyed by Bloomberg cut their growth forecasts for the country once again. Gross domestic product is likely to expand 4.9% in 2022, down from the previous estimate of 5%.
👑 The Leader:
Argentina’s Merval (MERVAL) resisted the downward trend seen in the United States and on the rest of the Latin American stock exchanges. The stock index managed to see gains and rebounded after the falls seen in Thursday’s session.
Despite the opportunity purchases seen during the day, investors continue to pay attention to the performance of the economy and with their eyes set on the agreement with the International Monetary Fund.
While Economy Minister Martín Guzmán is in the United States, the review date of the new program drawn up with the IMF is approaching, which, according to the head of the multilateral organization, Kristalina Georgieva, could be brought forward.
📉 A Bad Day:
Keeping pace with the losses in the United States, Latin America’s main stock markets closed lower, with the Brazilian market leading the losses after it returned to trading following yesterday’s holiday.
Brazil’s Ibovespa (IBOV), the main index of Latin America’s largest stock exchange by market capitalization, fell 2.86%. The performance of the materials, energy and consumer discretionary sectors dragged down the performance of the Brazilian stock market, which had its worst percentage drop since November last year.
“This is a reflection of divergent speeches from central bankers, with Powell signaling an acceleration of tightening while Roberto Campos Neto is going the other way,” said Marcos Ross, chief economist at Banco Haitong in São Paulo.
Brazil’s central bank president “seems to be more comfortable than the market with the current inflation,” he told Bloomberg News.
Mexico’s stock market added to the losses and extended the declines seen in the rest of the region. The materials, industrial and communication services sectors influenced the performance of the S&P/BMV IPC (MEXBOL).
🍝 For the Dinner Table Debate:
The price of our morning coffee has not been unaffected by the price increases that are affecting the entire world and, especially in Latin America, the daily cup is becoming increasingly more expensive, with increases of up to double digits in the prices of some products coinciding with harsh climatic seasons and the fertilizer supply crisis due to the war in Ukraine, which has had an impact on South and Central America.
While coffee was among the products with the highest price increases in 12 months up to March in Brazil, with an increase of 64.66%, in Colombia the inflation of the grain’s price was at 29.36% per annum up to that month.
Both the production and exports of coffee in Colombia have also been affected by the difficult weather conditions, which have been associated with heavy rains, according to the National Federation of Coffee Growers of Colombia (FNC).
In other producing countries such as Guatemala, a pound of coffee rose 16% so far in 2022, in the midst of the war in Ukraine that accentuated the increases in raw materials and inputs, while generating serious logistical challenges.