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U.S. Markets Rebound In Response to Powell; Argentina’s MERVAL Leads in LatAm

Elon Musk’s Twitter buyout is temporarily on hold as the world’s richest person awaits clarification of percentage of fake accounts

Jerome Powell, chairman of the U.S. Federal Reserve.
May 13, 2022 | 07:45 pm

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

🗽 On Wall Street:

U.S. stock markets took a breather at the close of the week and closed with gains, with shares of large technology companies leading the recovery.

Investor sentiment received a boost from remarks by Federal Reserve Chairman Jerome Powell, who was confirmed yesterday by the U.S. Congress for a second term in office.

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Powell said that “additional 50 basis point hikes over the next two meetings would be appropriate,” hinting that more aggressive hikes would not yet be on the table.

On these signals, the S&P 500 rebounded 2.39%, while the Dow Jones Industrials gained 1.47%.

The Nasdaq Composite (CCMPDL) advanced 3.82%, supported by shares of tech giants such as Apple (AAPL), Microsoft (MSFT) and Amazon (AMZN).

“Investors are comfortable with a round of Fed speeches suggesting that financial markets won’t have to discount further tightening in financial conditions over the next two decisions,” said Edward Moya, an analyst at Oanda.

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In the crypto world, a recovery was also evident, with Bitcoin rising above $30,000. Despite this, the stable crypto asset UST continued its collapse and its value dropped below 20 cents.

🔑 The Day’s Key Events:

Elon Musk’s purchase of Twitter (TWTR) was temporarily put on hold after the entrepreneur said the transaction is “pending details supporting the estimate that spam/fake accounts effectively represent less than 5% of users”.

Previously, the company had warned that the proportion could be higher than that. The fight against fake accounts has been one of the cornerstones of Musk’s bid to reform Twitter. In a statement announcing his deal to buy the company last month, he had said he wanted to eliminate spam bots.

Although the entrepreneur assured that he remained committed to the acquisition, the price differential for the proposed buyout soared Friday, according to Bloomberg calculations.

The spread, which offers a signal of Wall Street’s conviction that the acquisition will be completed, rose from $9.11 at Thursday’s close to about $13.70. In other words, the market increasingly believes that Musk is trying to change the price of his proposed purchase or even pull out of the transaction.

On Friday afternoon, Twitter CEO Parag Agrawal wrote on his account that while he expects the deal to be completed, they are “prepared for all scenarios and to always do the right thing for Twitter”.

🥇 The Leader:

Latin America caught Wall Street’s wave of optimism and the region’s main markets closed in positive territory, with an outstanding performance by the Argentine and Peruvian stock markets, which led the session today, after being the worst performers on Thursday.

Argentina’s Merval (MERVAL) was driven by the performance of stocks linked to commodities and the financial sector.

In the case of the S&P BVL/Peru (SPBLPGPT), the financial, industrial and materials sectors allowed it to break a streak of seven consecutive sessions of losses.

Brazil’s Ibovespa (IBOV) also closed with gains thanks to the advances of stocks linked to raw materials such as Vale (VVALE3) and Petrobras (PETR4).

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In turn, Mexico’s S&P BMV/IPC (MEXBOL) rebounded amid advances in the shares of banking institutions, in view of the low price levels accumulated in previous days and in a context of the central bank having raised interest rates by 0.5% on Thursday.

🍝 For the Dinner Table Debate:

The way iPhones are charged may be about to change, or at least that could be the case in European Union countries. Apple is testing future models of its flagship handset on which the current Lightning charging port is replaced by a USB-C connector.

A key reason for making the change is the European Union’s decision to force manufacturers of phones and other devices to adopt that type of connection. In April, legislation for such a requirement was passed.

The company is also working on an adapter that would allow future iPhones to work with accessories designed for the current Lightning connector, according to people with knowledge of the situation who spoke to Bloomberg News.

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Apple has said the European law would hurt its ability to innovate.

“We are concerned that regulation requiring a single connector type for all devices on the market will harm European consumers by slowing the introduction of beneficial innovations in charging standards, including those related to safety and energy efficiency,” the company said last year.