A roundup of Tuesday’s stock market results from across the region
🗽 On Wall Street:
On a volatile day of mixed performances, U.S. stock markets still felt the bearish sentiment of investors, due to fears that the world’s largest economy could fall into a recession amid the highest inflation in decades.
The S&P 500 advanced 0.25%, while the Nasdaq Composite (CCMPDL) rose 0.98%, but the Dow Jones fell 0.26%, its fourth consecutive decline.
Cleveland Fed President Loretta Mester told Bloomberg Television that 75 basis point hikes are not ruled out further down the road.
Her New York counterpart, John Williams, expects the central bank to “move quickly to bring the federal funds rate back to more normal levels this year,” according to Bloomberg.
Investors are now looking ahead to the consumer price index report, due out this week, which is expected to show that while pressures were still elevated, inflation likely moderated in April.
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🔑 The Day’s Key Events:
Oil prices continue to fall, to the point that the WTI benchmark fell below $100 per barrel, amid the strength of the dollar and discussions within the European Union (EU) to move forward with a blockade of Russian oil.
The U.S. currency continues to strengthen globally, amid fears of a possible recession in the U.S. economy. An expensive dollar makes commodities traded in this currency less attractive, which impacted oil prices on Tuesday.
The weakening came amid attempts by EU authorities to reach a consensus on their plan to completely eliminate dependence on oil supplies from Russia.
French President Emmanuel Macron met with Hungarian Prime Minister Viktor Orban as he tried to persuade Budapest to drop its opposition to proposed sanctions on Russian crude imports.
📉 The Leader:
In a mixed session for Latin American stock exchanges, Argentina’s Merval (MERVAL) was the leading index in the region. Gains came amid opportunity buying, after the index posted its biggest intraday drop since November 2021 on Monday.
Shares of Aluar (ALUA), Pampa Energía (PAMPA), Ternium (TXAR) and Central Puerto (CEPU) were among the best performers.
Gains also reached the Mexican stock market after the S&P BMV/IPC registered a slight rise of 0.12%, with the performance of the consumer staples and communication services sectors boosting the Mexican index.
📉 A Bad Day:
The Peruvian stock market had the worst performance, in a mixed session for Latin America’s main stock exchanges. Stock sell-off continued in the S&P BVL Peru and closed with a drop of more than 1%.
The consumer staples and materials sectors dragged down the Peruvian stock market’s performance.
Shares of Unión de Cervecerías Peruanas (BACKUSI1), InRetail Perú (INRETC1) and Southern Copper (SCCO) were among the worst performers.
In addition to international nervousness, amid fears of slower economic growth as inflation plagues the world’s major economies, the fall in copper prices also affected the performance of the Peruvian index.
The stock market has also been under pressure after Congress approved last week a sixth pension savings withdrawal, which has forced private funds to reshuffle their portfolios.
Losses were also posted by Brazil’s Ibovespa (IBOV), the main indicator of the largest stock market by market capitalization.
In addition to international contagion, Brazilian investors also weighed the minutes of the latest meeting of the country’s central bank, in which monetary policy makers raised the interest rate to 12.75%.
In the minutes, the monetary authority reiterated the scenario of great uncertainty involving persistent and prolonged inflationary pressures, saying that such a context requires the continuation of the monetary tightening cycle.
🍝 For the Dinner Table Debate:
Latin America is a region recognized for its high levels of crude oil extraction in the world, although only Venezuela appears among the main list of countries with the largest proven reserves along with other world powers.
In figures estimated by the Organization of Petroleum Exporting Countries (OPEC) until 2019, Latin America had 22.8% of the worldwide proven reserves. According to calculations by Bloomberg Linea, taking into account the region’s total reserves versus OPEC’s total world reserves until 2020, Latin American countries would have 20.5% of the world’s reserves.
A country’s oil reserves refer to the estimated crude oil not yet extracted but which can be recovered with current available technology and at an efficient cost for each country. Crude oil is the world’s main source of fuel.
Seen in this light, Venezuela is the country with the largest amount of oil in reserve in Latin America and the world. According to OPEC data, this country had 303.5 billion barrels in reserves to 2020.