Argentina’s Merval Index Rallies; NYSE Closes Lower Amid Rate-Hike Fears

Latin American markets closed mixed on Friday, while in the US, the Federal Reserve’s Christopher Waller stoked fears of more rate hikes

The bourse's Merval index led the gains in Latin America on Friday.
By Bloomberg Línea
April 14, 2023 | 08:15 PM

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

👑 Argentina’s Merval climbs 1.99%:

Argentina’s Merval index (MERVAL) led the gains in Latin America on Friday, climbing 1.99% and boosted by the shares of Grupo Supervielle (SUPV), Banco BBVA Argentina (BBAR) and Banco Macro (BMA).

March inflation in Argentina was 7.7%. Although most of the country’s economic consultants were expecting an acceleration of the consumer price index (CPI) during the third month of the year, the figure reported this Friday by the Indec surprised on the upside and set a new monthly record for the last two decades.

The national statistical institute also revealed that accumulated inflation during the first quarter of the year reached 21.7%, while the inter-annual price increase was once again above three digits and stood at 104.3%. Core inflation was 7.2%.


The division with the highest increase during March was Education, with an increase of 29.1%, due to increases in all educational levels at the beginning of the school year. Other notable increases were in Clothing and footwear (9.4%), Food and non-alcoholic beverages (9.3%), Alcoholic beverages and tobacco (8.3%), and Restaurants and hotels (7.9%)

📉 A bad day for Mexico’s Mexbol:

Mexico’s S&P BMV/IPC (MEXBOL) saw the sharpest decline in the region, falling 0.43% at the close of day, with the sharpest losses suffered by the shares of Controladora Vuela (VOLARA), Gruma SAB (GRUMAB) and Corporación Inmobiliaria Vesta (VESTA*).

Grupo México, Germán Larrea’s mining, railroad and infrastructure conglomerate, concluded the tender offer it launched on the Mexican Stock Exchange to acquire the outstanding shares of Planigrupo LATAM, a commercial real estate company it agreed to acquire in a transaction valued at 4.7 billion pesos ($260.9 million).


The company, which has made headlines in light of Larrea’s interest in Banamex, managed to purchase 95.47% of Planigrupo’s outstanding shares, representing 316,144,238 shares, it said in a statement released to the Mexican Stock Exchange.

The tender offer, which was conducted through the subsidiary Grupo Inmobiliario UPAS, was active from March 14 to April 13. Each share was exchanged at 14.20 pesos ($0.78) per unit, so the purchase represented about 4.48 billion pesos.

🗽On Wall Street:

US stocks edged higher while bonds yields surged this week as worries about the banking sector abated and traders upped wagers that at least one more interest rate increase could be in store from the Federal Reserve this year.

The S&P 500 rose 0.8% this week even as policy-sensitive technology names like Microsoft Inc. and Apple Inc. dragged on the benchmark. The Nasdaq 100 (CCMPDL) managed to squeeze out a 0.1% gain as the tech-heavy gauge erased some of its Friday losses late in the session after swaps traders upped bets for a rate increase by June. Trading suggests a quarter point hike has better than three-in-four odds for May.


The Dow Jones Industrial Average dropped 0.42%.

Markets were rattled after Fed Governor Christopher Waller said he favored more policy tightening in the central bank’s battle with inflation. His comments further fueled hawkish bets after a Reuters report indicated Atlanta Fed President Raphael Bostic was calling for a quarter-point increase at the May meeting followed by a pause.

Treasury yields rose, with the rate-sensitive two-year jumping to trade around 4.1%, a weekly high, after a measure of March retail sales showed core readings declined less than estimated and the comments from Fed officials. A Bloomberg gauge of the dollar climbed while gold futures tumbled.


Stuck on hold

Equities have been stuck in a narrow trading range this week and options data suggest they could remain there as the relative price to hedge remains elevated. Chartists are eyeing 4,200 as the key level the S&P 500 needs to breakthrough to finally regain momentum.

“There’s a lot for both bulls and bears to hang their hats on right now,” said Dan Suzuki, deputy chief investment officer at Richard Bernstein Advisors. “Bulls can point to pervasive bearish sentiment, last year’s rerating, declining interest rates, the falling US dollar, lower gas prices, the China reopening, a resilient domestic economy and decent market momentum.”

“On the other hand, bears can point to weakening overall growth, the earnings recession, tightening liquidity, as well as the the stubbornly high concentration and valuations in growth stocks,” he added.

A Deutsche Bank team led by Henry Allen had similar concerns. “The problem for many investors right now is that it’s still possible to construct fairly divergent narratives about the economy depending on which series you look at,” they wrote. “For instance, yield curves have inverted, temporary jobs are declining, and on previous occasions when the Fed have hiked this fast and this quickly, a recession has followed shortly afterwards.”


Financials outperformed this week with JPMorgan Chase & Co. and Citigroup Inc. leading the charge after earnings. Assurances about the sector’s health and an increase in deposits following the March failures of three smaller US lenders drove the big banks higher on Friday. Regional peers slid.

The sector will remain in the hot seat Monday when Charles Schwab Corp. and State Street Corp. report. Investors will be looking for signs of health from Schwab, which has plunged nearly 40% this year as rising rates drove a spike in unrealized losses at the brokerage. Bank of America Corp. and Goldman Sachs Group Inc. will report later in the week as will Netflix Inc. and Tesla Inc.

While recent data suggested runaway prices were moderating somewhat, a Friday report suggested Americans are pessimistic. Inflation expectations jumped in April with consumers seeing prices climbing 4.6% on an annual basis, up from 3.6% in March, according to a University of Michigan survey.


“Inflation in our minds clearly peaked last summer and has continued to improve. But the caveat is that we’re still a ways away from the Fed target,” Philip Orlando, chief equity market strategist and head of client portfolio management at Federated Hermes said of the central bank’s 2% inflation goal. “The Fed, once they do that last hike, in all likelihood is going to go on pause. And we think a pause is going to last a while, likely into next year.”

A hold on rates could draw investor focus back to the debate over an economic downturn and whether the market has a hard or soft landing in store.

“We started the year off with pretty solid data. Now we’re getting a payback into March,” Ethan Harris, head of global economic research at BofA Securities told Bloomberg Television after the retail sales report. “And so the question is: is this the beginning of that slide into recession? I’m leaning in that direction. I think that there’s some fundamental weakening going on in the economy.”


The Bloomberg Dollar Spot Index rose 0.4%, the euro fell 0.5% to $1.0996, the British pound fell 0.9% to $1.2415 and the Japanese yen fell 0.9% to 133.78 per dollar.

🍝 For the dinner table debate:

Elon Musk plans to create an artificial intelligence company to compete with OpenAI, according to the Financial Times, which says the billionaire is assembling a team of researchers and engineers to work on the project.

Musk is also holding talks with investors from Tesla Inc (TSLA) and SpaceX to help fund the project, the newspaper reported, citing unidentified people familiar with the matter.


The billionaire has purchased thousands of processors from Nvidia Corp (NVDA) for the new project, according to the Financial Times. That news helped boost the chipmaker’s shares on Friday, with the stock moving into positive territory after a dip earlier in the session.

Leidys Becerra, a content producer at Bloomberg Línea, and Vildana Hajric and Ritika Gupta of Bloomberg News, contributed to this report.