Argentina Heads LatAm Market Gains; Fed Minutes Soften US Share Plunge

In Latin America, only the Mexican and Peruvian markets closed with losses, while Federal Reserve minutes were not inspiring enough to provoke gains on the NYSE

El edificio Marriner S. Eccles de la Reserva Federal se encuentra en Washington, D.C., Estados Unidos, el martes 18 de agosto de 2020. I Fotógrafo: Erin Scott/Bloomberg
By Bloomberg Línea and Bloomberg News
August 17, 2022 | 08:40 PM

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

👑 Argentina’s MERVAL index leads in Latin America:

Argentina’s MERVAL index (MERVAL) had the strongest gains in Latin America on Wednesday, closing 0.94% higher, as Mirgor Saficia (MIRG), YPFD S.A (YPFD) and Cablevisión Holding (CVH) shares rallied.

Chile’s IPSA (IPSA) also closed higher, up 0.34%, with real estate, communication services and raw materials shares performing well.

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Sociedad Química y Minera (SQM/B), Empresa Nacional de Telecomunicaciones (ENTEL) and Empresas CMPC (CMPC) saw the sharpest climbs.

📉 A bad day for Peru:

Peru’s market saw the sharpest losses, the S&P/BVL Perú (SPBLPGPT) down 1.51% at closing, pulled down by the materials, finance and industrial sector shares.

Trevali Mining (TV), Minas de Buenaventura (BVN) and Volcán Cía Minera (VOLCABC1) shares saw the sharpest losses. Trevali posted the biggest drop after it reported its quarterly results this week below market expectation, prompting Raymond James analyst Brian MacArthur to lower his price target on the stock.

“Given Trevali’s high leverage to the zinc price and exploration optionality, we believe the company offers investors a great option on zinc, but note that the company has higher debt,” MacArthur said in a note to clients.

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estuvieron entre las de mayores pérdidas. Trevali registró la mayor caída después de que reportara sus resultados trimestrales esta semana por debajo de la expectativa del mercado, por lo que el analista de Raymond James, Brian MacArthur, rebajó el precio objetivo de las acciones.

“Dado el alto apalancamiento de Trevali con respecto al precio del zinc y la opcionalidad de exploración, creemos que la empresa ofrece a los inversores una gran opción sobre el zinc, pero hay que tener en cuenta que la empresa tiene una mayor deuda”, dijo MacArthur en una nota a los clientes.

Mexico’s S&P/BMV IPC (MEXBOL) also closed lower.

🗽 On Wall Street:

US stocks fell for the first time in four days as investors assessed the outlook for the path of interest-rate hikes after minutes from the Federal Reserve’s last meeting noted officials saw risks from tightening more than necessary.

The S&P 500 Index ended back at levels near the release of Fed minutes as the tech-heavy Nasdaq 100 resumed declines, dropping more than 1%. Minutes of the July 26-27 meeting noted the need to eventually dial back the pace of rate hikes but also the desire to gauge how their monetary tightening was working toward curbing inflation.

The S&P 500 dropped 0.72%, the Dow Jones Industrial Average 0.50% and the Nasdaq Composite (CCMPDL) 1.25%.

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In the bond market, two-year yields, the most sensitive to rate changes, trimmed most of their surge after the release. Futures contracts lowered the odds of a 75-basis-point Fed boost next month to about 40%, compared with traders split between a hike of that size and a 50-basis-point increase before the minutes. The dollar pared gains.

US stocks have rallied on signs of peaking inflation and an earnings-reporting season that saw four out of five companies meeting or beating estimates. Yet, prospects of the Fed continuing to raise rates to cool inflation and tip the economy into a recession has weighed on sentiment. Fed officials may offer fresh views on the outlook during their Aug. 25-27 retreat in Jackson Hole, Wyoming.

Earlier Wednesday, data showed retail sales stagnated last month on declines in auto purchases and gasoline prices, but other categories indicated resilient consumer spending. Excluding gasoline and autos, sales rose a better-than-expected 0.7%.

In corporate news, Target Corp. fell as profit lagged behind Wall Street’s estimates, while Lowe’s Cos. gained after the home-improvement retailer reported earnings that beat estimates even as renovators wrestle with a slumping US housing market.

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Cisco Systems Inc. gained in extended trading after the biggest maker of machines that run the internet and corporate computer networks, gave a bullish forecast for the quarter. Juniper Networks Inc. followed Cisco higher.

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“A correction from this level is very, very possible as earnings and margins deteriorate going into 2023,” Marco Pirondini, head of equities, US, and portfolio manager at Amundi US. “We expect the Fed to continue to increase rates, we expect the economy to slow down, possibly even enter a recession. The probability of a recession next year is higher than normal. So once you put all these things together, I think a more prudent approach is important.”

It’s been a choppy day for risk sentiment. Earlier on Wednesday, stocks rose in Asia amid speculation that China may deploy more stimulus to shore up its ailing economy. Some of those equity gains were surrendered when European trading opened and the focus turned to the Fed as well as UK inflation, which soared to double digits for the first time in four decades and spurred a global bond selloff.

On the currency markets, the Bloomberg Dollar Spot Index rose 0.3%, the euro was little changed at $1.0180, the British pound fell 0.4% to $1.2051, and the Japanese yen fell 0.6% to 135.02 per dollar.

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🔑 The day’s key events:

Oil prices rebounded, after touching a six-month low on Tuesday following progress in talks for a possible nuclear deal with Iran. A US government report showed that inventories fell by 7.06 million barrels last week, while exports hit a record high.

The data are signs that demand remains strong, despite fears of a possible global recession that could affect oil consumption. The report breaks a three-day losing streak, driven by the possible nuclear deal and slower economic growth in China. “A very bullish crude oil report eased global recession fears and reminded energy traders how limited capacity is available for oil markets,” said Edward Moya, senior market analyst at Oanda.

🍝 For the dinner table debate:

Apple Inc. (AAPL) has already defined the date for the launch of the iPhone 14, which would open the race for a series of new products to reach the market, ranging from new Macs, through iPads and three models of Apple Watch.

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The new version of the iPhone, a product that represents more than half of the company’s sales, will drop September 7, according to Bloomberg. The launch will take place at a virtual event, as has been the custom since the pandemic began.

Employees have already begun recording segments of the presentation over the past few weeks, Bloomberg News reported.

The company’s plans could change, although it typically holds iPhone launches in the first week of September.

-- Carlos Rodríguez Salcedo and Leidys Becerra, content producers at Bloomberg Línea, and Stephen Kirkland of Bloomberg News, contributed to this report.