U.S. Markets Suffer Steepest Slump in Almost 2 Years, LatAm Shares Also Slide

Oil fell to its lowest level in almos a week as more Covid-19 cases in China cloud the outlook for crude demand

A trader working in the New York Stock Exchange (NYSE).
May 18, 2022 | 09:51 PM

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

🗽 On Wall Street:

U.S. stocks posted their sharpest daily decline in nearly two years on Wednesday. Investors are assessing the impact of rising prices that appear unlikely to abate in the near term, and weighing the prospects for monetary policy tightening on economic growth.

The tech-heavy Nasdaq 100 fell the most among the major benchmark indexes with a decline of more than 5% as related growth companies plunged. Apple Inc (AAPL) and Amazon.com Inc (AMZN) slid at least 5%. Elsewhere, the S&P 500 fell 4.04% and the Dow Jones Industrials dropped 3.57%.

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“Investors are doubting that the Fed will be able to deliver a soft landing, as the inflation outlook could justify a much more aggressive tightening of monetary policy,” said Edward Moya, an analyst at Oanda, on the performance of the stock markets.

🔑 The Day’s Key Events:

Oil prices fell to their lowest level in nearly a week amid a massive market sell-off as new outbreaks of Covid-19 in China dampen the outlook for crude demand.

West Texas Intermediate (WTI) futures fell to near $110, after earlier rising above $115. Beijing reported new Covid cases on Tuesday, while Tianjin’s Binhai area put another zone under quarantine.

The drop also came amid a broader market selloff, with U.S. stocks suffering their biggest daily decline in nearly two years.

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“The market is extremely volatile, so any little bit of news or selling in the stock market” can cause big swings in crude markets, said Dennis Kissler, senior vice president of trading at BOK Financial. On the other hand, analyst Moya indicated that “the outlook for crude oil demand does not look as optimistic as it did a couple of weeks ago.”

📉 A Bad Day:

Losses on Wall Street dragged Latin American stock markets down by more than 2%. The Colombian and Brazilian stock exchanges had the worst performance.

The Colcap fell 2.73%, dragged down by the performance of the communication services, energy and finance sectors. Brazi’s Ibovespa index (IBOV) fell by 2.34%, affected by the performance of the real estate, materials and basic consumption sectors.

In line with the losses, the S&P/BVL Peru was the third worst performer on the day, falling 2.14%, followed by Mexico’s S&P BMV/IPC (MEXBOL), which fell 2.11%.

Argentina’s Merval (MERVAL) did not trade on Wednesday due to the holiday related to the country’s census.

🍝 For the Dinner Table Debate:

Buying an electric car is not only an environmentally friendly alternative to traditional mobility, but will also save money on fuel in the long run. However, the value of 100% electric vehicles can be higher than average, especially if a high-end car is chosen.

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To determine how much a 100% electric luxury car can cost in Latin America, Bloomberg Línea took the Porsche Taycan Turbo S, which is marketed in most countries in the region, as a parameter. For this model, a certain price discrepancy was observed, ranging from $200,000 to almost $600,000.

Even though the car under consideration is a high-end car, Argentina has the highest official list price in Latin America, at practically double that of the rest of the countries in the region, and where a Porsche Taycan Turbo S is priced at $569,000. Quite possibly, this high figure is influenced by the import barriers in the South American country, due to the shortage of dollars suffered by its central bank.

In Peru, a Porsche Taycan Turbo S has a list price of $209,900, the cheapest country in which to buy one in the region.