High-Worth Shares Tumble S&P 500; MEXBOL Leads LatAm Gains

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

🗽 On Wall Street:

On a volatile day, in which economic data from China weighed on investor sentiment, two of the main U.S. indices closed with losses.

The S&P 500 was dragged down by the performance of large market cap stocks such as Tesla (TSLA), Amazon (AMZN) and Apple (AAPL) and ultimately fell 0.39%. The trend also affected the Nasdaq Composite (CCMPDL) which lost 1.20%, but the Dow Jones Industrials managed to advance 0.08%.

“U.S. stocks traded mixed as investors assess weak data from China and the U.S. and the potential risk of stagflation and a much earlier recession,” considered Edward Moya, analyst at Oanda.

On Monday it was announced that Chinese industrial production suffered a 2.9% drop in April from a year earlier, while retail sales plunged 11.1% during the month.

The unemployment rate rose to 6.1% and the youth unemployment rate hit a record high, amid the Chinese government’s zero-Covid strategy.

🔑 The Day’s Key Events:

Elon Musk’s purchase of Twitter (TWTR) remains on hold, after the entrepreneur said last week that he was awaiting details to support the estimate that spam/fake accounts represented “effectively less than 5% of users”.

Now, the billionaire sowed more doubts about the transaction after he said he may try to renegotiate the purchase at a lower price than initially offered.

During a conference in Miami, Musk estimated that fake users of the social network represent at least 20% of all Twitter accounts. That was the lower limit of his estimate of the number of bots. He then rhetorically asked if the number could reach 90%.

During his participation, he said that a viable deal at a lower price would not be “out of the question”. The company’s shares fell more than 8%, below the closing price of $39.31 recorded on April 1, the last trading session before Musk disclosed his 9% stake in the company.

🥇 The Leader:

Latin America’s stock exchanges escaped the volatility experienced in the United States and the region’s main markets extended last Friday’s optimism and closed the day in the green.

The Mexican stock market led the gains and the S&P BMV/IPC (MEXBOL) advanced almost 2%, supported by the performance of the finance, materials and consumer staples sectors.

Among the day’s best performing stocks were Cemex (CEMEXCPO), Grupo Financiero Inbursa (GFINBURO), and Grupo Financiero Norte (GFNORTEO).

Brazil’s Ibovespa (IBOV) also closed with gains.

The movement of the Brazilian stock market was supported by shares related to raw materials and banks. Following the rise in oil prices, Petrobras (PETR3; PETR4) shares rose, as did those of the mining company Vale (VALE3), amid increases in iron ore prices.

Investors also weighed statements by Bruno Serra, the Central Bank’s policy director, in which he indicated that the monetary authority prefers to keep the interest rate as stable as possible, leading to reduced bets on further increases in the short term.

🍝 For the Dinner Table Debate:

The creators of the TerraUSD (UST) stablecoin are not giving up, after the coin collapsed last week, to the point that it not only lost its parity with the dollar with which it was promoted, but now its price is below 11 cents.

Luna Foundation Guard (LFG), the entity created by Terraform Labs to maintain UST’s parity with the dollar, has already used about $2.9 billion of its cryptocurrencies in its attempt to restore the token’s stability.

That is almost all of the $3.2 billion it held before the collapse occurred, according to calculations by Bloomberg. LFG held 80,394 bitcoin as of May 7. Based on that day’s closing price, its bitcoin reserves were worth $2.88 billion. Now, it only has 313 of these digital tokens, which are worth close to $9.3 million.

Its total crypto reserves have been reduced to around $236 million, which LFG says will be used to compensate UST holders.