A roundup of Monday’s stock market results from across the Americas
🌎 Argentina’s Merval gains 2.77%:
Latin American stock markets were once again led by the high gains of Argentina’s Merval (MERVAL), despite a slight correction from the previous week. The index rose 2.77% on Monday, driven by shares of Edenor S.A. (EDN), which gained 16.81%.
A possible swing to the center-right in the October presidential elections has positively impacted the Argentine market. Sovereign bonds maturing in 2035 rose about one cent per dollar on Monday to 28.91 cents, the highest level since February, following Friday’s announcement that Economy Minister Sergio Massa will represent the ruling Peronist coalition in the October presidential elections.
Meanwhile, Colombia’s Colcap (COLCAP) rose 0.43%, with an outstanding performance of energy and utilities sector shares.
This Monday, Grupo Casino, owner of most of the shares of Grupo Éxito (EXITO:CX), announced that it is seeking a buyer for its shares in the Colombian retailer. Following the announcement, Almacenes Éxito shares gained 1.45%.
In addition, Brazil’s Ibovespa (IBOV) reached three consecutive downward trading sessions, retreating 0.62% on Monday, after the index added nine weeks of highs at Friday’s close.
Mexico’s S&P/BMV IPC (MEXBOL) barely varied (-0.01%) and Chile’s stock exchange remained closed for a national holiday.
🗽On Wall Street:
US stocks fell while government bonds advanced as traders unwound bets the Federal Reserve will cut interest rates this year.
The Nasdaq 100 dropped 1.4% Monday, sliding for a second day after suffering its worst week since March. Profit taking in the technology sector continued as some of the year’s hottest names including AI-favorite Nvidia Corp. (NVDA) and Facebook-parent company Meta Platforms Inc. dipped. Tesla Inc. (TSLA) slumped 6.1% after Goldman Sachs Group Inc. joined the list of brokers turning less bullish on the electric-vehicle maker following this year’s blistering rally.
“It makes sense that there should be some pullback early-, intermediate-term given how big this move has been, especially relative to the rest of the investment universe,” said Matt Stucky, senior portfolio manager at Northwestern Mutual Wealth Management Co.
Traders are finally relenting on their bets that the central bank will cut rates this year after Fed Chair Jerome Powell last week warned the US may need one or two more rate increases in 2023. Investors have been growing more anxious that central banks determined to extinguish inflation will keep pushing rates higher and risk breaking fragile economies.
“Bulls should be happy with flat markets, especially in light of what happened over the weekend,” said Alec Young, chief investment strategist at MAPsignals after markets largely shrugged off the biggest threat to President Vladimir Putin’s almost quarter-century grip on power in Russia. “It continues to be a very data-driven market.”
Russian officials met key partners a day after Yevgeny Prigozhin halted the advance of his Wagner mercenary group toward Moscow. Putin condemned leaders of the Wagner mercenary group as traitors in his first public address since the revolt.
Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter, wrote that the political strife in Russia is likely to have little market impact.
“Looking forward, obviously this injects more geopolitical uncertainty into the world, but as long as commodity prices don’t spike higher, the markets will largely ignore Russian political volatility,” he wrote.
Amid a global bond rally, early gains in Treasuries faded with the yield on the policy-sensitive two-year at 4.74% and the 10-year bond at 3.72%.
“Markets are in a holding pattern,” said Sinead Colton Grant, global head of investor solutions, BNY Mellon Wealth Management. “They’re waiting for second-quarter earnings to start, which could be the end of the earnings recession, they’re waiting for more context from the Fed—will we get a July rate hike? There’s a lot of information to come.”
Oil advanced though it lingered below $70 a barrel, with traders alert to the risk that any prolonged turmoil in Russia could reverberate through global crude markets. The country’s war in Ukraine has already upended trade flows, with major consumers in Asia including China boosting imports of Russian energy.
The Bloomberg Dollar Spot Index was little changed, the euro rose 0.1% to $1.0908, the British pound was little changed at $1.2712 and the Japanese yen rose 0.1% to 143.51 per dollar.
🍝 For the dinner table debate:
The environment for initial public offerings (IPOs) in the US market, the world’s largest, continues to face obstacles such as high interest rates and uncertainty about a possible recession in the country. But for a top official of the world’s leading exchanges, Nasdaq, conditions are ripe for the resumption of offerings by the end of the year, and Latin America is expected to follow suit in 2024.
There are an estimated 20 unicorns (startups valued at least US$1 billion) in the region that had plans to go public before local and global markets turn around and interest rates begin to rise from 2021. Not all will resume their plans in the short term, but some have prepared operationally for when the offering window reopens.
Examples include Ebanx, PicPay and Rappi, according to market experts.
“My colleagues who analyze the global outlook point out that the market will recover by the end of the year and, of course, Latin America will do the same. Maybe we will see the region enter in 2024, as we have had companies preparing for a few months now,” Ivana Ferreira, Nasdaq’s head of Latin America listings, told Bloomberg Línea in an interview at the company’s New York headquarters.
