A roundup of Monday’s stock market results from across the Americas
🌎 Argentina’s Merval leads LatAm market gains:
In Latin America, most stock markets closed Monday’s trading day higher, with the exception of the Colombian Colcap index (COLCAP), which fell 0.35%, and Mexico’s S&P/BMV IPC (MEXBOL), which saw a second consecutive drop of 0.27%.
The best-performing stock market was Argentina’s, with the Merval index (MERVAL) rising strongly on optimism about the agreement with the International Monetary Fund (IMF) and in the face of the PASO primary election results in Santa Fe. The Merval rose 3.05% at the end of the day, to 456,842.78 points, a new high for the Argentine index.
The Argentine government once again accelerated the negotiation with the IMF after a sharp rise in parallel dollars was seen during the past week. A delegation of the Argentine economic team, headed by Gabriel Rubinstein and Leonardo Madcur, will travel tonight to Washington to meet with the multilateral organization, seeking to polish the fine print of the agreement and settle the doubts that generated the return of the exchange rate tension.
Meanwhile, the primary elections in Santa Fe showed that the opposition force (at provincial and national level) is the favorite to beat the current ruling party for the governorship of the third most populated province in the country, on September 10, leaving Peronism behind.
Continuing with the good performance of the Latin American stock exchanges, the Chilean market was the second best performer at the close of today’s session. The selective index of the Chilean Stock Exchange (IPSA) rose 1.08% and continues to score new all-time highs, as confidence in Chilean equities continues.
The Ipsa benefited from a strong rally in SMU stock, which was again the best performing stock after rising 4.77% on the day. SMU’s paper is leading the Ipsa’s rises after businessman Álvaro Saieh liquidated his positions in the last few days on two occasions. So far in 2023, Saieh has sold SMI shares for an accumulated amount of more than 30 billion Chilean pesos.
Other shares that boosted the Ipsa were those of Falabella (FALAB), which rose 4.56%; Mallplaza (MALLPLAZ), which rose 3.36%; and Empresas Copec (COPEC), with an increase of 2.82% at the end of the session.
Brazil’s GDP contracted above all projections in May, falling 2% from the previous month, and there are warnings of a cooling of the largest economy in Latin America as its interest rates remain high.
🗽On Wall Street:
US stocks resumed a rally as investors weighed bets the Federal Reserve is approaching the end of its interest-rate hikes against evidence pointing to a slowdown in China’s economy.
The S&P 500 gained 0.4% and the tech-heavy Nasdaq 100 rose 0.8%, adding to last week’s historic gains amid optimism the Fed may soon be able to claim victory over inflation.
Activision Blizzard Inc. rose after Microsoft Corp. and British regulators held “productive” talks needed to clear the companies’ $69 billion tieup. Ford Motor Co. fell after cutting the price on the electric version of its F-150 truck. The dollar fluctuated, and equities in Europe and mainland China declined after gross domestic product in China grew at a slower-than-expected pace in the second quarter, increasing risks likely to hit the global economy.
“Many countries do depend on strong Chinese growth to promote growth in their own economies, particularly countries in Asia, and slow growth in China can have some negative spillovers for the United States,” Treasury Secretary Janet Yellen said in a Bloomberg TV interview on Monday. “Growth has slowed, but our labor market continues to be quite strong. I don’t expect a recession.”
For a time, analysts believed Chinese shoppers coming out of Covid lockdowns would be able to carry the global economy — despite rising US and European interest rates. However, that narrative is looking increasingly shaky.
Yellen said she sees the US on a “good path” to bringing down inflation without a major weakening in the labor market.
Last week stocks and bonds rallied after data showed a slowdown in the rate of inflation.
“We’re in a place where inflation is becoming problem number two and problem number one is growth and people are starting to get comfortable that growth is going to be okay,” said Scott Ladner, chief investment officer at Horizon Investments LLC. “Anytime you see small-caps outperforming large-caps and the Nasdaq, that’s people starting to get on board with the ‘growth in the US is going to be just fine’ standpoint.”
The next pressure point for markets will be earnings, with hundreds of companies reporting over the next few weeks. S&P 500 firms are expected to post a 9% drop in profits in the second quarter, making it the worst season since 2020, according to data compiled by Bloomberg Intelligence. In Europe, it may be even worse, with a projected 12% slump.
“Running bulls could be tripped up by cracks in the economy and corporate earnings,” Saira Malik, chief investment office of Nuveen, said. “Looking at S&P 500 corporate earnings as a gauge, analyst estimates continue to be revised lower for both the second quarter of 2023 and the full year.”
In commodities, crude futures dropped as traders weighed disappointing Chinese data and restarting Libyan supplies against signs of a tightening market. Wheat futures jumped after Russia terminated a grain-export deal, jeopardizing a key trade route from Ukraine. And gold was little changed.
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.1% to $1.1241
- The British pound fell 0.1% to $1.3076
- The Japanese yen was little changed at 138.67 per dollar
🍝 For the dinner ta table debate:
In the midst of Russia’s invasion of Ukraine, strengthening relations between the European Union (EU) and Latin America is encountering geopolitical obstacles. According to Bloomberg, diplomats are at loggerheads over a possible declaration marking the end of the summit between the EU and the Community of Latin American and Caribbean States (CELAC) regarding the ongoing war against Ukraine, while Latin American countries hold another view.
Specifically, according to a draft to which Bloomberg had access, the European diplomatic authorities want CELAC to be forceful in condemning the “ongoing war against Ukraine”, in order to demand a withdrawal of Russian forces and show forcefulness in the face of “the aggression of the Russian Federation”.
But some countries refuse to be tougher against Russia, and the consensus is for Latin American countries to “express their concern” about the war conflict.
This clashes with the objectives of the European continent to seek greater support for Ukraine and to reduce China’s dominance, as well as to guarantee access to critical raw materials for the energy, ecological and digital transition.
Paola Villar S, a content producer at Bloomberg Línea, and Emily Graffeo and Isabelle Lee of Bloomberg News, contributed to this report.