:quality(75)/cloudfront-us-east-1.images.arcpublishing.com/bloomberglinea/SJACNOUW4JGOVFXA6P33NPEMYQ.jpg "People pass in front of the entrance sign to the Buenos Aires Stock Exchange in Buenos Aires, Argentina. Photographer: Diego Giudice/Bloomberg")
A roundup of Thursday’s stock market results from across the Americas
👑 Argentina’s Merval leads in Latin America:
Latin America’s major stock exchanges closed the day in the green on Thursday, with Argentina’s Merval (MERVAL) and Brazil’s Ibovespa (IBOV) leading the session’s gains.
The Argentine stock market closed with a 4.27% increase, boosted by the good performance of shares of Transportadora de Gas del Sur (TGSU2), Banco Macro (BMA) and YPF S.A (YPFD).
“Although a short-term correction was expected, the market does not slacken and prices strongly break market resistances. At the beginning of the electoral year, local stocks seem to be a good alternative for investors and, even considering the increase they had last year, it is expected that they will continue in this trend”, said Priscila Bruno, an analyst at Rava Bursátil.
On the other hand, in Brazil, the speeches of President Lula da Silva’s team calmed the fiscal fears of the last few weeks. The Brazilian index closed with a gain of 2.19%, driven by the performance of the services, industries and communication services sectors. The performance of strong stocks such as those of Vale (VALE3), Petrobras (PETR4) and Bradesco (BBDC4) buoyed the Ibovespa’s performance.
The reassuring pronouncements by ministers in favor of fiscal responsibility encouraged investors today. The Minister of the Civil House, Rui Costa, denied yesterday that the new government should review the 2019 pension reform.
On the other hand, in her inauguration on Thursday, Planning Minister Simone Tebet favored tax cuts. In addition, President Lula called the first ministerial meeting for tomorrow. According to Vanessa Naissinger, Rico’s investment specialist, the expectation that tomorrow’s meeting will refine the government’s discourse “calmed the market’s mood”, as well as less interventionist statements by candidate to Petrobras’ presidency Jean Paul Prates.
🗽On Wall Street:
US stocks closed lower as continued evidence of strength in the labor market fueled speculation the Federal Reserve has room to keep raising rates. Short-dated Treasuries fell.
The S&P 500 and the Nasdaq 100 each lost more than 1% after hiring numbers surpassed estimates in a private payrolls report and new claims for unemployment benefits unexpectedly fell last week. The policy-sensitive, two-year Treasury yield climbed the most in a month. The dollar strengthened versus major peers.
The S&P 500 dropped 1.16%; the Nasdaq Composite (CCMPDL) 1.47% and the Dow Industrial Average 1.02%.
Dovish comments from St. Louis Fed President James Bullard, who said rates are getting closer to a sufficiently restrictive zone, briefly improved sentiment, but were not enough to divert focus from hiring data. The Fed has suggested that a tight labor market remains a threat to its efforts to slow inflation, ramping up the stakes for government employment figures due early Friday.
At the same time, officials remain worried that financial conditions could get too loose to effectively crimp economic growth, even after the Fed embarked on the most aggressive tightening campaign in decades.
“What the Fed really wants to see is some slack build up in the labor markets, in hopes it can do this gently without creating much of a downturn,” Raghuram Rajan, a former governor of India’s central bank, said on Bloomberg Television. “But it may well be that by the time it seems that it will have raised rates enough, that the momentum takes us down to a mild recession at the very least.”
Atlanta Fed President Raphael Bostic contributed to the subdued sentiment on Thursday after he said the central bank still has “much work to do” to tame inflation. He added to a chorus of hawkish Fed officials this week. Minneapolis Fed President Neel Kashkari said Wednesday he expects rates to rise as high as 5.4%, while Kansas City Fed’s Esther George said she favors a rise above 5%.
Swaps linked to individual Fed decisions jumped and now suggest a peak in the overnight effective rate above 5% in the middle of 2023. The current target range for the Fed is 4.25% to 4.5% and there are around 37 basis points of hikes priced in for the next gathering in February..
On the currency markets, the Bloomberg Dollar Spot Index rose 0.6%, the euro fell 0.8% to $1.0520, the British pound fell 1.2% to $1.1909 and the Japanese yen fell 0.6% to 133.38 per dollar.
🔑 The day’s key events:
Oil prices rose again on Thursday after two consecutive days of losses. The rebound followed news that US crude stockpiles rose less than expected.
According to the Energy Information Administration, US exports of crude oil and refined products increased by 1.33 million barrels last week, which kept inventories under control. Investors see the data as a sign that global demand persists, despite fears of a possible delay in China’s economic recovery.
West Texas Intermediate (WTI) for February delivery rose 1.14% to settle above US$73, while Brent for March settlement closed at US$78.84 a barrel.
Earlier, crude had trimmed gains after Saudi Aramco, state-owned by Saudi Arabia, cut crude prices in Asia and Europe, a sign the market interpreted as an indication that demand remains sluggish as economies slow. However, the inventory news offset the losses.
🍝For the dinner table debate:
Russian President Vladimir Putin on Thursday ordered his troops in Ukraine to stop fighting for 36 hours on the dates of Christmas for the Russian Orthodox Church. Specifically, it will be between noon on Friday to midnight of Saturday, January 7, according to a Kremlin statement.
The announcement came hours after the church’s patriarch, Kiril, made an appeal to that effect. An advisor to Ukrainian President Volodymyr Zelenskiy, Mykhailo Podolak, had criticized the request. He later said the offer was “hypocrisy.” Kiev officials have demanded that Russia remove its troops from the country as a condition for any cease-fire.
Putin’s announcement came hours after he reiterated that Russia would only conduct serious negotiations “on condition that the Kiev authorities meet the known and repeated demands and take into account new territorial realities,” the Kremlin statement said. It was referring to Moscow’s demands that Ukraine give up territories claimed by Russia.
