:quality(75)/cloudfront-us-east-1.images.arcpublishing.com/bloomberglinea/VJHGQU5ISNDBJDAYXNB4GV4MIA.jpg "A Wall Street street sign in front of the New York Stock Exchange (NYSE) in New York, US.")
A roundup of Monday’s stock market results from across the Americas
👑 Argentina’s Merval leads in LatAm:
After a mixed day in Latin America, Argentina’s Merval index (MERVAL) closed with the strongest gains, up 2.91%, boosted by the shares of YPF (YPFD), Cresud (CRES) and Sociedad Comercial del Plata (COME).
After several hours of tension and clashes with the opposition, the Argentine government announced an agreement with banks, both public and private, regarding a debt swap to be carried out this week, which will seek to extend maturities to 2024 and 2025 and thus dispel the specter of a re-profiling of debt in pesos after the presidential elections. The agreement was very well received among investors.
“It is a voluntary swap, a tender that is launched and breaks with the idea that Argentina has a debt reprofiling every week,” said Economy Minister Sergio Massa, accompanied by authorities of the main banks operating in Argentina and by the banks’ associations.
📉 A bad day for Peru and Mexico:
Peru’s S&P/BVL index (SPBLPGPT) and Mexico’s S&P/BMV IPC (MEXBOL) headed the losses in the region on Monday, with Peru’s index down 0.50%, dragged down by shares of Minsur S.A. (MINSURI1), Ferreycorp (FERREYC1) and Southern Copper Corporation (SCCO).
Mexico’s index slipped 0.48%, with the sharpest declines seen by shares of Grupo México (GMEXICOB), Operadora de Sites Mexicanos (SITES1) and Grupo Cementos de Chihuahua (GCC*).
🗽On Wall Street:
The stock market failed to gain traction on speculation that a recent rally has probably gotten overdone as economic risks linger.
It’s not that investors were brimming with confidence at the start of trading, but the S&P 500 managed to climb almost 1% at one point. Those gains, which followed the best week for equities in a month, waned throughout the session — with a rise in Treasury yields bringing an additional layer of pressure.
The S&P 500 gained 0.07%, the Dow Jones Industrial Average 0.12%, while the Nasdaq Composite (CCMPDL) slipped 0.11%.
To Michael Wilson at Morgan Stanley, while technical factors could give some support to equities in the near term, the “bear-market rally” wouldn’t last long as fundamentals continue to deteriorate. So basically the recent market action could be seen as the “calm before the storm,” said Mark Hackett, chief of investment research at Nationwide.
Four major events between now and the Federal Reserve’s March 22 decision will be the key catalysts in determining whether the 2023 revival in equities gets derailed or starts rolling again after a February slump.
“Traders are still anticipating a 25 basis-point hike in a few weeks, and investors should prepare for volatility if the jobs read surprises in either direction — especially as some Fed officials have indicated a 50 basis-point hike remains on the table,” said Chris Larkin, managing director at E*Trade from Morgan Stanley.
‘Max hawkish’
Before the pivotal jobs report Friday, a double-day dose of Fed Chair Powell before Congress will set expectations for the next policy meeting.
Krishna Guha at Evercore said Powell will possibly emphasize the notable resilience of the economy and indications that the process of returning inflation to its target will be lengthy and bumpy. However, Powell will not turn “max hawkish” or fuel speculation of a 50 basis-point hike, Guha noted.
“This would not present any need to shift market rate pricing higher,” he added.
The US economy might escape a deep recession, according to JPMorgan Chase & Co.’s chief Jamie Dimon.
“We could still have a soft landing,” he said. “A mild recession is possible, a harder recession is possible. I think there’s a good chance that inflation will come down, but not enough by the fourth quarter — the Fed may actually have to do more.”
The stock and the credit markets are telegraphing a message of caution on how global financial assets and the economy may evolve. The spread between BBB rated dollar-denominated corporate debt and the earnings available on the S&P 500 is now above zero for the first time since the global financial crisis.
The differential is typically negative, reflecting the higher risk of capital that is invested in equities even as corporate bond yields stay elevated. However, when speculative money flocks into equities, it turns positive, suggesting that investors may be overlooking the risk embedded in stocks.
Regarding currencies, the Bloomberg Dollar Spot Index was little changed, the euro rose 0.4% to $1.0677, the British pound fell 0.1% to $1.2019 and the Japanese yen was little changed at 135.99 per dollar.
🍝For the dinner table debate:
The Latin American country with the best democracy is Uruguay, according to a ranking prepared by Economist Intelligence. Contrary to what happens in the Rio de la Plata country, this ranking places Venezuela in the worst place in the region, even below Cuba and Nicaragua.
In fact, Uruguay not only leads the regional table, but also has a privileged position at the international level. It is the 11th with the best democratic quality in the world, according to this ranking, surpassing, for example, countries such as Canada.
The second best placed country in Latin America is Chile, which ranks 19th in the world. The third Latin American country, Panama, is in 49th place.
Among the strongest economies in Latin America, the worst ranked in terms of democracy is Mexico, which ranks 89th.
Leidys Becerra, a content producer at Bloomberg Línea, and Rita Nazareth of Bloomberg News, contributed to this report.
