Tech Share Sell-Off Sinks U.S. Markets; Brazil’s Ibovespa Leads LatAm Losses

Latin America faces “unusually high” risks, the International Monetary Fund said on Tuesday

Signage at Google headquarters in Mountain View, California, U.S. Photographer: David Paul Morris/Bloomberg
April 26, 2022 | 07:30 PM

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

🗽 On Wall Street:

U.S. stock markets were driven downward by a sell-off of technology stocks on Tuesday, hours before the quarterly results of sector giants Alphabet (GOOGL) and Microsoft (MSFT) were released.

The S&P 500 fell 2.81%, while the Nasdaq Composite (CCMPDL) slipped 3.95% and the Dow Jones Industrials fell 2.38%.

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For Edward Moya, an analyst at Oanda, the market’s mood was also influenced by fears about the slowdown in the economy and the possibility that the Federal Reserve will tighten its monetary policy.

“Inflation is not going to let up anytime soon, as Russian headlines suggest that the war in Ukraine could escalate further. This will continue to drive fears of central bank tightening,” he said.

Russia will cut off gas to Poland and Bulgaria, making good on a threat to cut off supplies to countries that reject President Vladimir Putin’s new demand to pay for fuel in rubles.

Europe has said that doing so would be a violation of sanctions and would strengthen Russia’s position.

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🔑 The Day’s Key Events:

Latin America faces “unusually high” risks, the International Monetary Fund (IMF) warned on Tuesday.

Growth in the region is losing momentum to the point that it is returning to the weak pre-pandemic growth rate of an estimated 2.5% this year.

This is largely due to the slowdown in Latin America’s two main economies, according to an analysis led by Ilan Goldfajn, director of the IMF’s Western Hemisphere Department.

For the Washington-based organization, governments are in the midst of the challenge of providing aid to the population with unrelenting inflation, without affecting the sustainability of public finances.

According to Goldfajn, about 40% of the countries in the region have introduced new measures to address rising prices. These range from reducing taxes and import tariffs to price limits or social transfers, and already represent an average fiscal cost estimated at 0.3% of this year’s GDP.

📉 A Bad Day:

In line with the losses that occurred in practically the entire region, Brazil’s Ibovespa (IBOV) saw the sharpest drop, extending its losses posted on Monday.

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In Brazil, Banco Santander’s (SANB11) balance sheet with results that fell short of expectations hurt the performance of the banking sector.

In addition, the Focus report was published Tuesday by Brazil’s central bank, and which showed a worsening of inflation and interest rate projections for this year.

Economists raised estimates for the national consumer price index from 7.46% to 7.65% in 2022, and now see a Selic rate of 13.25% at the end of the year, compared to a previous projection of 13.05%.

Mexico’s S&P/BMV IPC (MEXBOL) was no stranger to the regional performance and also closed lower.

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🍝 For the Dinner Table Debate:

The mayor of Buenos Aires, Horacio Rodríguez Larreta, presented on Tuesday ‘Buenos Aires+’, a modernization plan aimed at “making the state efficient, close to the people and dynamic”, and which will include the payment of taxes with cryptocurrencies.

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The intention of the city administration is to incorporate virtual procedures to avoid resorting to a public office and physical payment centers.

It will be possible to pay taxes in cryptocurrencies,” Rodríguez Larreta said, but clarified that his administration will not have crypto assets in the public coffers, but payment will be through the use of virtual wallets.

Julián Colombo, head of public policy at Bitso, told Bloomberg Línea that the new payment method will be launched “as soon as possible”, and assured that it will be implemented during this year.

“It is essential that cryptocurrencies are inserted into people’s daily lives,” he said. “We are working on our system to have it ready for its launch and to be able to do it from day one,” he said. “We are working hard at Bitso to show that crypto can be used for many things”.