A roundup of Thursday’s stock market results from across the Americas
👑 Argentina’s Merval leads in Latin America:
Latin American markets closed higher Thursday, with the exception of Brazil’s Ibovespa.
Argentina’s Merval index (MERVAL) led the gains, closing 1.30% higher, buoyed by the shares of Empresa Distribuidora y Comercializadora Norte (EDN), Cablevision Holding (CVH) and Banco Macro (BMA).
In a context of falling foreign investments - during the first quarter of 2023 there was a year-on-year drop of over 90% in mergers, acquisitions and investments in the country - and a shortage of reserves in the Argentine central bank, the Argentine government today announced the incorporation of a French mining company to a regime that facilitates access to dollars, a resource that is more than demanded by companies that import, in view of the various exchange restrictions.
The benefited company is Eramine Sudamérica, which is advancing in the construction of the Centenario-Ratones lithium project in Salta, which foresees a total investment of US$680 million. With this investment, it was able to access the Investment Promotion Regime for Exports by which it will have free availability of a fraction of the total amount of foreign currency entering the country to be able to cancel the debts incurred for the financing of the projects while ensuring a surplus exchange balance for Argentina.
A source from the economy ministry told Bloomberg Línea that this is not the first mining company to access this regime. According to the source, who asked not to be identified, the Chinese company Zijin Mining, which owns the 3Q lithium project under construction in Catamarca, is another company that has been able to access the regime.
📉 A bad day for the Ibovespa:
Brazil’s Ibovespa (IBOV) dropped 0.40% on Thursday, with the shares of BRF SA (BRFS3), Marfrig Global Foods (MRFG3) y Minerva SA (BEEF3) seeing the sharpest losses.
Brazilian development bank BNDES intends to allocate up to 30% of its disbursements to finance local companies in the areas of innovation, sustainability and energy transition, as part of a plan to support the industrial sector with affordable interest rates.
Credit to industry would grow gradually until the end of President Lula’s term and could reach 60 billion reais ($12 billion). It will also depend on congressional approval of new rules allowing BNDES to set lower interest rates for specific sectors it wants to support, according to José Luis Gordon, the bank’s director of development, foreign trade and innovation.
BNDES financing is a crucial part of Lula’s plans to revitalize Latin America’s largest economy. However, the bank’s possible use of subsidized rates is a concern for Central Bank president Roberto Campos Neto, who warned that they could reduce the power of monetary policy and force the benchmark Selic rate to remain high for longer.
🗽On Wall Street:
US equities traded higher Thursday, as the latest readings on jobs and factory-gate inflation were slightly softer than expected, a boost for those hoping the Federal Reserve may be approaching the end point of an era of aggressive interest rate hikes.
The S&P 500 rose 1.3% while the more rate-sensitive Nasdaq 100 gained 2.0% after US jobless claims for the week ended April 8 rose to 239,000, compared to estimates of 235,000. Meanwhile, producer prices came in at 2.7% year-on-year, versus the 3% that had been expected.
The Dow Jones Industrial Average added 1.14%.
Treasury yields rose with the 10-year trading around 3.45%. The dollar lost more ground against a basket of currencies. Elsewhere, Amazon.com Inc. rose 4.7% after announcing technology aimed at cloud customers and a marketplace for AI tools. SoftBank Group Corp. also fell on plans to slash its stake in Alibaba Group Holding Ltd.
“Basically what the data are showing is two things,” Que Nguyen, chief investment officer of equity strategies at Research Affiliates, said by phone. “The first is that inflation is not surprising to the upside, and at the same time, the job market seems stable. And so what we’re getting today is sort of an optimistic outlook that we’re going to have an almost like a goldilocks situation where inflation’s going to slow, but the economy is not crashing.”
This week’s consumer inflation report showed a fall in year-on-year headline figures, but a rise in core prices. Meanwhile, last week’s March payrolls rose at a firm pace with unemployment near record lows again. All that has left swaps markets still favoring a quarter-point hike by the Federal Reserve in May, though traders added to wagers that the Fed will cut interest rates by year-end at a faster pace than anticipated earlier in the week.
“For a Fed already inclined to pause, this report tips the scale just a bit more in favor, especially after yesterday’s CPI failed to reveal any new inflationary problems,” Christopher Low of FHN Financial said. “The link between the PPI and CPI is not as clear as it once was, but persistently small increases — or, as in March, an outright decline — will eventually come through to consumers.”
Minutes of the Fed’s March meeting published Wednesday showed policymakers scaled back expectations for rate hikes this year after a series of bank collapses roiled markets, and stressed they would remain vigilant in the face of a potential credit crunch. Officials also forecast a “mild recession” starting later this year given “the potential economic effects of the recent banking-sector developments.”
Next, investors will be turning their attention to bank earnings starting on Friday and commentary from executives on the probability of a recession.
“Bank lending is arguably the most important component of a strong economy, so insights from bank CEOs are critical right now,” David Trainer, CEO of New Constructs, wrote. “Investors are counting on strong earnings to help the year-to-date stock market rally continue, which is why this upcoming first quarter earnings season is so important.”
Europe’s equity benchmark posted a modest gain. Oil fell, gold rose, and Bitcoin traded around $30,300.
The Bloomberg Dollar Spot Index fell 0.6%, the euro rose 0.5% to $1.1047, the British pound rose 0.3% to $1.2527 and the Japanese yen rose 0.3% to 132.74 per dollar.
🍝 For the dinner table debate:
Lionel Messi and Kylian Mbappé starred in one of the most impressive sporting confrontations of all time: the final of the Qatar 2022 World Cup, in which the Argentine scored two goals and the Frenchman scored three, although the former was the winner.
But besides sharing that honor and also being teammates at Paris Saint-Germain, Mbappé and Messi have something else in common: they are the only footballers included by Time magazine in the list of the 100 most influential people in the world in 2023.
The soccer star born in the city of Rosario, Argentina, is not the only Latino included in the list, as the following also appear: the president of Brazil, Luiz Inácio Lula da Silva; the president of Colombia, Gustavo Petro; the Chilean actor Pedro Pascal; the Mexican activist, María Herrera Magdaleno; and the Mexican actress, Salma Hayek.
The only two soccer players who received awards from Time magazine in this edition occupied two different categories. In the case of Messi, he was placed in the “Titans” section. Meanwhile, Mbappé was placed in the “Innovators” section.
Leidys Becerra, a content producer at Bloomberg Línea, and Isabelle Lee and Peyton Forte of Bloomberg News, contributed to this report.