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S&P 500 Hits Lowest Level this Year; Argentina’s MERVAL Only LatAm Index With Gains

Oil prices closed the week with gains as operators await the progressive shutdown of Russian supply imposed by the EU

A street sign in Wall St., across from the NYSE.
May 06, 2022 | 08:20 pm

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

🗽 On Wall Street:

U.S. stock markets on Friday extended the downward trend of Thursday as investors continue to weigh the effects of tighter monetary policy and a possible economic slowdown.

The S&P 500 closed down 0.57%, while the Dow Jones Industrials lost 0.30%, while the Nasdaq Composite (CCMPDL) slipped 1.40%.

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“For Wall Street to continue to have full confidence in accumulating stocks again, inflation must show signs that it is slowing and that is not happening yet,” said Edward Moya, an analyst at Oanda.

With this performance, the S&P 500 fell to its lowest level in about a year and the posted its fifth consecutive weekly decline, the longest losing streak since June 2011.

Investors were also on the lookout for a jobs report that revealed non-farming payrolls rose by 428,000 in April and the unemployment rate remained at 3.6%.

🔑 The Day’s Key Events:

Oil prices closed a week of gains as traders look ahead to the phase-out of Russian supply that the European Union intends to push through and which needs the unanimous approval of the 27 countries of the bloc.

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For now, Hungary and Slovakia have rejected this possibility, even though European authorities have put on the table that they have another year to comply with the decision, according to sources consulted by Bloomberg.

The EU intends to ban Russian crude in six months and oil products by the end of the year, as one of the measures to sanction Russia following its invasion of Ukraine.

“In the short term, oil fundamentals are bullish and only fears of an economic slowdown ahead are holding us back,” Phil Flynn, senior market analyst at Price Futures Group, told Bloomberg.

Oil prices have risen more than 40% this year following the war in Europe and both major market benchmarks are trading above $100.

🥇 The Leader:

In a session marked by volatility, Argentina’s stock exchange was the only one to make gains in Latin America, despite the fact that most of the day it was in the red.

The Merval (MERVAL) closed with an increase of 0.08%, thanks to the performance of stocks such as BBVA Argentina (BBAR), Edenor (EDN) and Grupo Financiero Galicia (GGAL).

Opportunity purchases boosted the index’s performance, after Thursday’s 3.32% drop, in line with the slump in the United States.

📉 A Bad Day:

The declines deepened on Latin American stock markets, after they closed Thursday with losses after being affected by the slump experienced by the markets in the United States.

Investors doubt that the fight against inflation will not lead to a slowdown in the world’s main economy, while most Latin American countries are also struggling with the rising cost of living.

Mexico’s stock market (MEXBOL) fell the most in the session, dragged down by the performance of communication services, health and basic consumer goods.

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“Risk factors are unlikely to change in the short term. Inflation will remain elevated in the remainder of 2022 and the economy will begin to slow down because the post-omicron rebound has passed,” mentioned analysts at Actinver.

The Ibovespa (IBOV), the main indicator of the largest stock exchange by market capitalization in Latin America, also accompanied the losses and closed the week with losses, on a day of strong risk aversion, with investors migrating towards assets considered to be ‘safe haven’.

“The stock market is reflecting the fall outside, with U.S. technology companies falling and emerging companies suffering,” said Pedro Serra, head of research at Ativa Investimentos.

🍝 For the Dinner Table Debate:

Monetary authorities around the world intend not to be left behind in the digital asset furor, as cryptocurrencies such as bitcoin (XBT) and ether (XET) continue to see a mass uptake.

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According to the Bank for International Settlements (BIS), nine out of 10 central banks are exploring the option of creating their own digital currencies, and more than half are already developing or experimenting with them.

China, Nigeria, the Bahamas and some Eastern Caribbean islands are already issuing or testing consumer-oriented digital currencies.

The BIS said central banks’ work “has progressed to more advanced stages”. More than two-thirds are considering an architecture that involves working with private sector intermediaries, Bloomberg reported.