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U.S. Markets Slip Further; Brazil’s Ibovespa Leads LatAm Advance

Latin America has a new unicorn, the second of this week, after Colombia’s Habi and Brazil’s Dock surpassed the $1-billion valuation

Photographer: Nina Westervelt/Bloomberg
May 12, 2022 | 06:40 pm

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

🗽 On Wall Street:

The declines on U.S. stock markets continued Thursday as fears of slower economic growth amid high inflation continue to weigh on investor sentiment.

The S&P 500 fell by 0.13%, while the Dow Jones Industrials reached six consecutive days of declines and fell by 0.33%, while the Nasdaq Composite (CCMPDL) advanced nominally, closing up 0.06%.

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Bearish sentiment was reinforced after the release of prices paid to U.S. producers rose more than expected in April, bolstering bets that the Fed will further tighten monetary policy.

“Right now, confidence is shaky among market participants and people are in no mood to take risks,” wrote Fawad Razaqzada, an analyst at City Index and FOREX.com.

The major U.S. stock indices have lost more than $6 billion since March 29, according to Bloomberg estimates, but despite this magnitude Citigroup analysts believe stock markets are likely to remain under pressure.

🔑 The Day’s Key Events:

Latin America has a new unicorn, making it two more this week, after Colombia’s Habi and Brazil’s Dock reached a valuation of $1 billion in new financing rounds.

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The milestone reached on Wednesday by Habi was matched on Thursday by Dock, a Brazilian technology platform for payments and banking services, which announced that it raised $110 million in a round led by Lightrock, a global private equity platform, and Silver Lake Waterman, part of Silver Lake, a global technology investment firm.

Dock’s idea is to deliver financial products to companies, from banks, fintechs, to other industries.

In Brazil, the company operates by issuing cards and is now taking the business model to other Latin American countries, with a digital account and banking services allowing client companies to be “their own bank”.

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🥇 The Leader:

Brazil’s stock market uncoupled from the losses in the United States, which set the tone for the performance of the main Latin American markets.The Ibovespa (IBOV) benefited from the quarterly reports of the banking sector and regained 105,000 units.

In addition, the performance of the non-core consumer products, real estate and health sectors favored the performance of the Brazilian index.

Magazine Luiza (MGLU3), Petrobras (PETR4) and Itaú (ITUB4) shares also performed well during the session and pushed the Ibovespa up.

The Mexican stock exchange (MEXBOL) also managed to escape the downward trend further north and ended the session in the green.

The communication services, consumer staples and industrials sectors pushed the Mexican index higher.

📉 A Bad Day:

Peru’s stock market continues to add to its losses and so far this week has failed to register gains, hit by the pessimism that has taken over the world markets due to the fear of a possible recession in the main economies.

The financial, materials and industrial sectors showed the biggest losses on the day.

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In the case of stocks, Trevali (TV) suffered the biggest setback with a drop of more than 10%. Casa Grande (CASAGRC1), Aenza (AENZAC1) and Volcan Cia Minera (VOLCABC1) also fell.

The mining sector has been under pressure amid the blockade of the Las Bambas mine, operated by China’s MMG. The country is losing some $10 million per day in exports with the stoppage of operations.

🍝 For the Dinner Table Debate:

Netflix’s (NFLX) loss of 200,000 subscribers in the first quarter of the year shook the streaming services sector globally and was again shaken by the delivery of financial results, in which the company projected that it would lose another two million customers in the current quarter.

Some months ago, the company had already commented on the possibility of introducing new subscription models that would include advertising and, therefore, would be more economical for users.

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Netflix has told its employees in an internal note that the goal of including ads in its lower-cost or free plans could launch in the last quarter of 2022, much earlier than initially planned, The New York Times reported.

Among Netflix’s reasons for the loss of users are the prevalence of password sharing, and the growing competition from other streaming platforms that are also launching their own productions as well as blockbusters.