Argentina’s Merval Continues to Climb; Tech Stocks Weigh Down Wall Street

A roundup of Tuesday’s stock market results from across the Americas

👑 Argentina’s Merval maintains upward streak:

Latin American stock markets closed mixed on Tuesday, with Argentina’s Merval (MERVAL) once again leading the day’s gains among its regional peers after adding 3.70%.

The good performance of Telecom Argentina (TECO2), Cablevision Holding (CVH) and Transportadora Gas del Norte (TGNO4) shares buoyed the index.

In today’s news, the Central Bank of Argentina’s (BCRA) debt does not stop its advance and in the last hours it reached a new historical nominal maximum. The interest-bearing liabilities of the Argentine monetary authority exceeded for the first time the $12 trillion threshold, accumulating a growth of 150% in the last year.

As of March 23, the latest official data available on the Central Bank’s website, the stock of Leliqs amounted to $9.42 trillion, while the stock of passive liabilities reached $2.6 trillion. Thus, according to private estimates, the Central Bank’s debt stands at around 11 points of GDP, levels similar to those exhibited in 2018 prior to the Lebac crisis. The risks, however, are different given the foreign exchange restrictions -which prevent them from pressuring the dollar- and the fact that Leliqs are only in the hands of banks, which have limits on foreign currency holdings.

📉 A bad day for Chile’s IPSA:

Chile’s IPSA (IPSA) was the index that fell the most during the day after losing 0.25%, dragged down by the performance of the energy, industrials and real estate sectors. Shares of SMU SA (SMU), Inversiones Aguas Metropolitanas SA (IAM) and Quinenco SA (QUINENC) affected the Ipsa’s performance.

After crime, inflation is the main headache for Chileans. This is shown by the survey Pulso Ciudadano of the firm Activa Research, published this Sunday, where 34.2% of those consulted consider the high cost of living as one of the country’s three biggest problems.

The latest data have brought relief. The Consumer Price Index (CPI) fell by 0.1%, surprising the market, which had estimated a rise of up to 0.4%. For Mario Marcel, Minister of Finance, it only reaffirmed a downward trend in the persistent inflation.

But the calm could disappear in a few days. Analysts are starting to make new estimates, which are not very encouraging for March. Economists consulted by Bloomberg Línea and some reports released by analysts project that the indicator will record a monthly variation between 0.9% and 1.2% during the third month of the year, breaking with the falls reported since December 2022.

The most modest bet comes from the Survey of Economic Expectations of the Central Bank of Chile (BCCh): 0.9%, an estimate shared by Coopeuch and distant for EuroAmerica, which predicts a monthly increase of 1.2%.

🗽On Wall Street:

A slide in technology shares halted a three-day advance in US stocks as investors continued to recalibrate bets on the Federal Reserve’s path forward on interest rates. Treasuries drifted lower.

The Nasdaq 100 (CCMPDL) slumped 0.5% — paring a March advance to 4.7% — with tech stalwarts from Apple Inc. to Alphabet Inc. among the biggest drags. The S&P 500 slipped 0.16% and the Dow Jones Industrial Average 0.12%.

The tech stocks suffering the sharpest losses during the day were Apple Inc. (APPL) and Alphabet Inc. (GOOGL).

Tech stocks had found favor in recent weeks with the rotation out of financials following the collapse of three US banks. However, the trade has started to unwind with increased speculation turbulence in the banking sector will be contained.

Two-year Treasury yields edged to just above 4%, while a gauge of the dollar notched its lowest close in eight weeks.

“Part of the giant bid in Treasuries last week was fear of contagion in financials,” said Tom Hearden, senior trader at Skylands Capital LLC. “That’s abated so far this week” with thin markets, off side positioning, and a financial contagion bid.

The moves come as investors prepare for a raft of data on the American economy this week, including the central bank’s preferred measure of inflation, which is likely to factor into the Fed’s next rate decision.

St. Louis Fed President James Bullard said “appropriate monetary policy can continue to put downward pressure on inflation” despite the turmoil in banking. Meanwhile, US consumers appear to have shrugged off the bank failures, with the latest consumer confidence figures unexpectedly higher in March.

Swaps traders have priced in more than a 50% probability the Fed will lift rates by a quarter point at its next meeting, with plans to ease then sharply thereafter. However, several strategists have joined BlackRock Investment Institute in saying markets are wrong in expecting imminent rate cuts.

“Recent events in the US and European banking sectors have not altered our macroeconomic views,” wrote Joe Davis, chief global economist at Vanguard, in a note. “The Federal Reserve still has work to do to bring down inflation — a task that was always going to be a challenge, likely to entail higher unemployment and tighten credit and financial conditions.”

Elsewhere, oil was higher after a clash between Iraq and its Kurdish region curtailed exports. Gold gained and Bitcoin traded around $27,400.

The Bloomberg Dollar Spot Index fell 0.4%, the euro rose 0.5% to $1.0847, the British pound rose 0.5% to $1.2343 and the Japanese yen rose 0.6% to 130.80 per dollar.

🍝 For the dinner table debate:

Sam Bankman-Fried, co-founder of FTX, was formally charged with bribing Chinese officials on Tuesday as part of a revised indictment by federal prosecutors in Manhattan.

Specifically, he is accused of authorizing the payment of $40 million to one or more Chinese officials to get them to unfreeze accounts of Alameda Research, a Hong Kong-based trading company affiliated with FTX, which held more than $1 billion in cryptocurrencies.

Prosecutors allege that in 2021 Bankman-Fried and individuals associated with him attempted to regain access to assets in Alameda’s accounts to fund trades.

With the charge of conspiracy to violate the Foreign Corrupt Practices Act, Bankman-Fried now faces 13 criminal counts. He has already pleaded not guilty to several fraud charges for allegedly funneling billions of dollars from the now-bankrupt FTX to Alameda and for personal expenses.

Three of his close associates, Gary Wang, Caroline Ellison and Nishad Singh, have already pleaded guilty to fraud and are cooperating with the government.

Leidys Becerra, a content producer at Bloomberg Línea, and Emily Graffeo and Isabelle Lee of Bloomberg News, contributed to this report.