A roundup of Friday’s stock market results from across the Americas
🌎 Argentina’s Merval leads LatAm Gains:
Latin American stock markets closed a good week, in general, with some indices posting strong gains, as was the case of Argentina’s Merval (MERVAL), which in the last five days recorded a rise of 8.17%, followed by Brazil’s Ibovespa (IBOV), which rose by 5.84% in the same period. The Ibovespa also closed Friday as the best performing stock exchange of the session, surpassing the gains of even the NYSE.
In third place is the Colombian stock exchange (COLCAP), which, despite this Friday’s setback, closed the week with an appreciation of 3.14%. Colombia has been the scene of a new political crisis that plays against President Gustavo Petro, and the possibility that his reforms may be delayed has boosted the optimism of the private sector.
In addition to the Colcap, the Peruvian stock exchange (SPBLPGPT) declined the most on Friday, with a drop of 1.06%, pushed down by the shares of mining companies.
On the Ibovespa, the sectors that performed the best on Friday were energy (3.70%), communications (2.32%) and public services (2.32%). In the energy sector, Petrobras shares rose the most: PETR3 shares rose 4.88%, while PETR4 shares rose 4.81% on the day. Likewise, Ultrapar Participações (UGPA3) shares rose by 2.14%.
In contrast, the sectors that dragged down Peru’s Lima Stock Exchange (BVL) were materials (-2.69%), where mainly mining companies are listed, and consumer (-0.43%) and industrial (-0.38%). In the materials sector, which fell the most, the shares that fell the most were those of Buenaventura (BVN), Volcan (VOLCABC1) and SiderPerú (SIDERC1).
🗽On Wall Street:
A seemingly unstoppable stock rally fueled by Wall Street’s obsession over anything related to artificial intelligence faltered on Friday, with the market facing the test of a massive options expiration.
Traders also took some chips off the table ahead of Monday’s US holiday. The Nasdaq 100 underperformed, led by losses in giants like Microsoft Corp. and Apple Inc. — which had recently closed at all-time highs. A worrisome warning from Micron Technology Inc. weighed on chipmakers, while Adobe Inc. climbed on a bullish forecast. The S&P 500 halted a six-day winning streak, but still notched its best week since March.
Stock traders caught between the fear of missing out on this year’s rally and mounting concerns about an overbought market had something else to cope with this week: positioning.
With an estimated $4.2 trillion in options contracts tied to stocks and indexes scheduled to mature, traders would typically need to either roll over existing positions or start new ones. The impact of derivatives on trading this week was so significant that, at one point, the market’s favorite volatility gauge was climbing alongside the S&P 500.
The so-called VIX finally gave in, and with Friday’s plunge, it ended up erasing this week’s advance.
“The market could see some wild swings in either direction for no fundamental (or even technical) reason at all,” on a day like today, wrote Matt Maley, chief market strategist Miller Tabak + Co. “So nobody should read anything into today’s movement.”
Inflation, Putin, Fed
Indeed, the market seemed to have ignored to a certain extent some developments that would otherwise be considered catalysts for trading.
That was the case with data showing a slump in consumer year-ahead inflation expectations and the latest geopolitical news. President Vladimir Putin said Russia has delivered its first tactical nuclear weapons to Belarus, three months after announcing the plan that threatens to ratchet up tensions with the US and its allies over the war in Ukraine.
Not even hawkish Fedspeak had much of an impact or any impact at all on trading.
“The market caught a renewed bid from traders suffering from FOMO and ‘chasing’ the market higher,” said Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter. “We are not bearish stocks right now, but we are growing cautious on the very near-term direction of the market given how quickly the market priced in a very Goldilocks macroeconomic environment based on only limited evidence of improvement in the current major market influences.”
The rally in US stocks is about to run out of steam, according to Citigroup Inc.
Strategists at the bank led by Scott Chronert this week reiterated their call for the S&P 500 to drop to 4,000 by year-end, and initiated a new target of 4,400 by mid-2024, or just below Friday’s 4,410 close.
Bank of America Corp.’s Michael Hartnett said Friday he’s not convinced this is the start of a “brand, new shiny bull market.” The current market looks more like 2000 or 2008, with a “big rally before big collapse,” Hartnett wrote.
Equities had about $22 billion inflows in the week through June 14, while bonds had $6.7 billion of additions, BofA said in a note, citing EPFR Global data.
In other corporate news, iRobot Corp. soared after Amazon proposed $1.7 billion deal to buy the robot vacuum firm was given the all-clear by the UK’s antitrust agency. Virgin Galactic Holdings Inc., Richard Branson’s space-tourism venture, surged after announcing that its long-awaited first commercial passenger mission will take off as soon as June 27.
Regarding currencies, the Bloomberg Dollar Spot Index rose 0.1%, the euro was little changed at $1.0936, the British pound rose 0.3% to $1.2822 and the Japanese yen fell 1.1% to 141.84 per dollar.
🍝 For the dinner table debate:
A judge of Latino origins will hear one of the most important court cases in the United States. She is Aileen M. Cannon, who has been initially assigned to oversee the case for the handling of secret documents of former president Donald Trump and who is no stranger to the process against the former president.
Cannon, 41, worked at the law firm Gibson Dunn (2009-2012) and also served as a federal prosecutor in the Southern District of Florida (2013-2020) before being nominated by Trump. The official was born in the Colombian city of Cali, but moved at a very young age to live in the United States, in the city of Miami, and graduated from Duke University in 2003.
Cannon is now the one who will oversee the criminal prosecution against the former U.S. president. She was nominated as district judge by Donald Trump in 2020, when he was still president of the United States.
It should be recalled that Trump was also accused in another case in a court in New York for alleged irregular payments he made to a porn actress so that she would not disclose to the public a sexual relationship between the two. This case is also in the hands of a judge of Colombian origin: Juan Merchan, judge of the Supreme Court of the State of New York, was the one who made the arraignment against the former president for the case of the alleged payments to the actress.
Paola Villar S., a content producer at Bloomberg Línea, and Rita Nazareth of Bloomberg News, contributed to this story.