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U.S. Markets Slump; Argentina’s MERVAL Suffers Sharpest Drop Since November

Oil prices plummeted after the EU softened its draft of measures to reduce its dependency on Russian crude

People walk along Wall Street, in New York City, U.S. (Photo by Spencer Platt/Getty Images)
May 09, 2022 | 10:30 pm

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

🗽 On Wall Street:

The massive sell-off in stocks that began last week, following the Federal Reserve meeting, continued into Monday’s session as doubts remain as to whether the central bank is able to control the highest inflation in decades without generating a recession in the U.S.

The S&P 500 closed down 3.20%, below 4,000 points, to its lowest point in more than a year, while the Dow Jones Industrials slid 1.99%, and the Nasdaq Composite (CCMPDL) saw the biggest loss on the NYSE, sliding 4.29%.

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“Inflation looks set to remain stubbornly high, which will force the Fed to tighten policy to levels that will jeopardize the soft landing most traders were expecting,” according to Edward Moya, an analyst at Oanda.

The cryptocurrency market also suffered from the plunge and bitcoin (XBT) fell below $31,000 for the first time since July 2021, down more than 50% from the record high it reached last November.

🔑 The Day’s Key Events:

Oil prices plunged amid a massive sell-off in stocks and after the European Union softened a proposed package of measures to cut dependence on Russian oil.

WTI futures fell more than $6 per barrel, the biggest retreat since late March. The Brent benchmark also suffered a similar decline.

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The 27-nation EU bloc will drop the idea of banning EU-owned ships from transporting Russian oil to third countries, according to documents seen by Bloomberg and people familiar with the matter.

Greece, whose economy relies heavily on shipping, was one of the member states pushing for the provision to be dropped, the sources cited said.

EU officials have also sought to reach out to Hungary, which is blocking the proposal to eliminate reliance on Russian crude for the next six months and refined fuels in early January.

“The rejection by some members such as Hungary and Slovakia could mean the EU may need to go back to the drawing board on its initial sanctions proposal,” said Rohan Reddy, a research director at Global X Management.

📉 A Bad Day:

These are not good days for the markets and Latin America is no stranger to this trend. None of the region’s main stock exchanges registered gains, in a session in which declines in the United States and Europe set the pace for the day.

Amid the red numbers, Argentina’s Merval (MERVAL) saw the worst performance and recorded its biggest day-on-day fall since November.

Commodities-related companies did not have a good day, in the midst of the decline of the main commodities.Argentinean stocks listed on Wall Street showed the same performance, to the point that MercadoLibre (MELI) fell more than 16% during the day.

Mexico’s stock exchange (MEXBOL) dropped 0.98% and Brazil’s (IBOV) dropped 1.79% at closing.

Investors in Brazil are awaiting the release of inflation measured by the National Broad Consumer Price Index for the month of April, as well as retail data for March and the minutes of the last Monetary Policy Committee meeting.

🍝 For the Dinner Table Debate:

The automotive industry has been one of the most affected by the pandemic and the war in Ukraine.

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Problems in the logistics chain have had a direct impact on the delivery times of new vehicles to customers, which is why the used or pre-owned vehicle market continues to grow.

Now, with high inflation in the region and a shortage of semiconductors that is not improving, experts expect this trend of increases to continue until 2023.

Recent figures from the U.S. National Automobile Association have indicated that the semiconductor shortage has caused a decrease of approximately 4.6 million new vehicles and, in the short term, another 1.2 million would cease to be produced, which also generates pressure on the supply of used vehicles, according to sources consulted by Bloomberg Linea.

Agustín Garicoche, CEO of OLX Autos, told Bloomberg Línea that the abrupt increase in demand for used vehicles “is not immediately transferred to a greater supply”, so the company projects that the “situation of ‘shortage’ of used vehicles will continue throughout 2022 and perhaps early 2023″.