Argentina Heads LatAm Market Gains; US Stocks See Best Week Since June

Colombia’s was the only stock exchange in Latin America to close with losses on Friday, while the optimism brought by this week’s inflation data continued to reflect positively on the NYSE

Photographer: Michael Nagle / Bloomberg
By Bloomberg Línea and Bloomberg News
November 11, 2022 | 09:55 PM

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

👑 Argentina’s Merval leads in Latin America:

Argentina’s Merval (MERVAL) led Latin America’s main gainers on Friday, rising 3.82%. The shares that performed best were YPF S.A. (YPFD), up 7.2%, Transportadora del Gas del Norte S.A. (TGS), gaining 6%, and Central Puerto S.A. (CEPU), which closed 5.3% higher.

Brazil’s Ibovespa (IBOV) and Mexico’s S&P/BMV IPC (MEXBOL) advanced 2.26% and 1.82%, respectively. The Ibovespa, after two days of declines, closed in green on Friday, boosted by Vale (VALE3) shares, and the announcements of the relaxation of Covid measures in China also boosted the shares of Petrobras (PETR3, PETR4).

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Peru’s S&P/BVL (SPBLPGPT) and Chile’s IPSA (IPSA) also closed higher, with gains of 1.07% and 0.21% respectively. In Peru, the materials and financial sectors performed well, while in Chile the industrial sector also stood out.

📉 A bad day for Colombia’s COLCAP:

Colombia’s Colcap (COLCAP) was the only stock market to close with losses on Friday, with a drop of 0.92% on the back of the poor performance of energy sector stocks.

The worst performers on the day were Ecopetrol (ECOPETL) and Celsia (CELSIA), down 8.23% and 2.34% on Friday.

Ecopetrol’s stock has had a bad week despite the good financial results delivered by the company. This Friday it plummeted after it exited the MSCI Global ETF. Ecopetrol’s exit from the MSCI index, which also lists the shares of Bancolombia, ordinary and preferred, as well as ISA, was due to the loss of liquidity of the share.

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🗽 On Wall Street:

US stocks gained surer footing after a choppy morning session, extending a rally sparked by a slowdown in inflation. The dollar fell, declining for a fourth week.

The S&P 500 closed near session highs in the biggest weekly gain since June, up 0.92%. The tech-heavy Nasdaq Composite (CCMPDL) climbed 1,88%, notching its best week in two years, and the Dow Jones Industrial Average gained 0.1%.

Cash Treasury trading was closed Friday for Veterans Day.

Elsewhere, China easing some Covid restrictions helped underpin risk sentiment Friday, with US-listed Chinese stocks rising along with commodities from oil to soybeans to precious metals.

Meanwhile, cryptocurrencies resumed a selloff amid FTX’s deepening woes with Sam Bankman-Fried’s crypto empire filing for bankruptcy. While that news weighed on sentiment in early trading, investors downplayed contagion risks.

“From my vantage point, the real-world impact seems somewhat limited,” said Dan Suzuki, deputy chief investment officer at Richard Bernstein Advisors LLC. “It’s hard to imagine how it has a big impact on the overall economy. Crypto makes up a relatively small portion of financial markets, financial transaction, jobs, consumer spending, business spending, etc.”

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US stocks soared the most since 2020 on Thursday after a better-than-forecast cooling in US inflation improved prospects of a dovish tilt by the Federal Reserve. On Friday, the University of Michigan’s preliminary November survey showed US consumer inflation expectations increased in the short and long run while sentiment retreated.

Boston Fed President Susan Collins said that the risks of going too far have risen after a string of jumbo-sized rate hikes, but noted a smaller, more “deliberate” increase should not be confused with backing down from curbing price pressures.

“The moderation in the pace of inflation is a welcome development, while it is still far too early to declare the inflation threat over,” Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote. “We still think the Fed is likely to raise at least another 100 basis points in total before it pauses the rate hiking cycle.”

While markets reacted positively to the inflation print Thursday, Credit Suisse strategists led by Jonathan Golub said the rally was “out of sync with the size of the surprise.” This, they note, follows a pattern of outsize responses to CPI prints, which has averaged 2.8% on the day in the past seven releases.

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The dollar slumped more than 1% on Friday in the biggest weekly drop since the pandemic-fueled volatility in March 2020.

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Bitcoin dropped as much as 8% to $16,376 and Ether fell as much as 9.2%. FTX.com’s bankruptcy filing capped a swift reversal of fortune for the crypto exchange led by Bankman-Fried.

Pinduoduo Inc. and JD.com Inc. jumped in US trading amid growing optimism Beijing is on its way to ending the crippling Covid Zero policy. China reduced the amount of time travelers and close contacts must spend in quarantine.

On the currency markets, the Bloomberg Dollar Spot Index fell 1.3%, the euro rose 1.4% to $1.0357, the British pound rose 1.1% to $1.1845 and the Japanese yen rose 1.6% to 138.68 per dollar.

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🔑 The day’s key events:

Oil prices recorded another day of increases, this time driven by good news from China regarding the relaxation of some restrictions on Covid-19, generating optimism about a recovery in demand for crude oil and other raw materials in the Chinese giant.

West Texas Intermediate (WTI) reached $88.87 and Brent reached $95.87, marking increases of 2.79% and 2.35%, respectively, in response to China’s reduction in the time that travelers and close contacts of Covid-19 infected persons must be quarantined, a significant amendment to the Covid Zero policy.

So striking was the response of commodities, that copper, precious metals and foodstuffs such as corn and wheat, rose in price in the markets. Even aluminum had its best day since 2009, Bloomberg noted.

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“The impact of these changes may not be felt immediately, but any sign that China is preparing to move away from Covid Zero is enough to cause a rally in commodities,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Management.

🍝 For the dinner table debate:

Investors were liquidating their holdings of cryptocurrencies on Friday amid the uncertainty surrounding such assets: the bankruptcy filing of broker FTX. This could drag down other cryptocurrency firms, say crypto players in the region.

In Friday trading, bitcoin (XBT) dropped 5.36% to $16,853.33 and ethereum (XET) was down 5.09% to $1,254.20. And there is scope for further setbacks.

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Reinaldo Rabelo, CEO of Brazil’s Mercado Bitcoin, backed by SoftBank, said that the entire market will feel the company’s collapse, as has happened with other cryptocurrency company crises.

For his part, Guillermo Torrealba, CEO of Buda.com told Bloomberg Línea that FTX represents a hard blow for the environment because it increases doubts around “some centralized services”, such as the platform created by Sam Bankman-Fried. In this sense, Torrealba accused that one of FTX’s failures was to maintain liquidity, a factor in which “it was expected not to fail”.

Sebastián Osorio Idárraga, a content producer at Bloomberg Línea, and Stephen Kirkland and Isabelle Lee of Bloomberg News, contributed to this report.