Argentina’s Merval Leads LatAm Market Gains; S&P 500, Nasdaq Close Lower

The majority of Latin America’s stock markets closed higher on Thursday, while worse than expected quarterly results by big tech firms pushed the S&P 500 and Nasdaq lower

Markets Wrap
By Bloomberg Línea and Bloomberg News
October 27, 2022 | 08:30 PM

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

👑 Argentina out in front in Latin America:

Latin American markets closed higher on Thursday, with the exception of Mexico’s, with Argentina’s Merval (MERVAL) leading the gains and Brazil’s Ibovespa (IBOV) snapping a three-day downward slide.

The Merval closed 2.12% higher, pushed up by the shares of Transportadora Gas Norte (TGNO4), Ternium Argentina (TXAR) and Central Puerto (CEPU).

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The Ibovespa climbed 1.66% with the strongest hikes posted by the shares of Yduqs Participacoes (YDUQ3), IRB Brasil Resseguros (IRBR3) and Magazine Luiza (MGLU3).

Idean Alves, partner and head of the trading desk at Ação Brasil, links the move by state-owned companies to the idea that investors want to position themselves before the election runoff in order to gain in the short term. While the retail valuation comes a day after the Selic interest rate remained at 13.75% p.a., with expectations of rate cuts in 2023.

📉 A bad day for Mexico’s BMV:

Mexico’s S&P/BMV IPC (MEXBOL) closed 0.88% lower after posting the region’s highest gains on Wednesday.

Shares of Orbia Advance (ORBIA*), Cemex (CEMEXCPO) and Corporación Inmobiliaria Vesta (VESTA) were among those with the sharpest losses.

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Cemex shares tumbled following the release of the cement giant’s third-quarter results and a reduction in its earnings guidance for 2022.

The company expects to close the year with EBITDA of approximately $2.7 billion, 4% below the $2.82 billion recorded in 2021. The company had previously anticipated low to mid-single-digit growth for 2022.

🗽 On Wall Street:

Wall Street contended with another volatile session as investors mulled the Federal Reserve’s path of interest-rate hikes while assessing mixed economic data and a slew of earnings reports.

Amazon shares (AMZN) plunged after hours as its sales forecast trailed estimates. Shares of Apple Inc. struggled for direction post-market after it reported weaker-than-expected iPhone and services sales in its latest quarter.

The S&P 500 closed lower, after swinging between gains and losses for most of the session. The Nasdaq 100 fell more than 1% in regular trading and an exchange-traded fund tracking it slid further after 4 p.m. in New York. Lackluster earnings from several megacap firms this week dampened sentiment and underscored the impact of the Fed’s tightening regime. Meta Platforms Inc. (META) posted its worst one-day drop since February on Thursday, triggered by burgeoning metaverse costs and a decline in revenue.

The S&P 500 dropped 0.61% and the Nasdaq Composite (CCMPDL) 1.63%, but the Dow Jones gained 0.61% at Thursday’s close.

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Markets were also mixed on US gross domestic product data. The report showed the US economy rebounded after two quarterly contractions, which briefly assuaged concerns of an imminent recession. But it also highlighted that consumer spending remains under pressure because of inflation. Treasuries gained, with the 10-year yield pushing below 4% on speculation of a Fed pivot. The dollar snapped a two-day drop.

The stock and currency markets digested the GDP data differently because it’s difficult to tell what the Fed is planning to do next, said Fiona Cincotta, senior financial markets analyst at City Index.

“The US dollar is reading into this that perhaps it’s going to keep the Fed on that hawkish path for longer,” Cincotta said by phone. “Whereas the stock market seems to be reading it completely differently, almost as if it’s expecting the Fed to be sort of moving toward that less hawkish stuff.”

Economists still expect the Fed to hike by three-quarters of a percentage point for the fourth time in a row when it meets next week. But with recent data highlighting the effects of the Fed’s sharp rate hikes on the economy, investors expect the central bank to slow its pace of tightening after November’s meeting.

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“It’s not about a pivot and cutting interest rates,” Alec Young, chief investment strategist at MAPsignals, said in an interview. “It’s just about the Fed becoming more data-dependent and acknowledging there’s already a lot of tightening in the pipeline from all the rate hikes they’ve put through so far.”

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Earlier, the European Central Bank lifted its policy rate by 75 basis points -- in line with expectations -- and signaled more tightening ahead. But ECB officials weren’t unanimous about the size of the interest-rate hike and sought to avoid giving a specific signal on their next move in December, according to people familiar with the matter.

On the currency markets, the Bloomberg Dollar Spot Index rose 0.4%, the euro fell 1.1% to $0.9971, the British pound fell 0.4% to $1.1575, and the Japanese yen rose 0.1% to 146.20 per dollar

🔑 The day’s key events:

The recent two-day rally in cryptocurrency prices stalled Thursday. The increases had spurred optimism among their fans for a longer-lasting rally.

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Bitcoin, the largest token by market value, was down as much as 1.5% to trade back around $20,000, a level around which it has been stuck for weeks. “After a two-day reminder of the potential for cryptocurrency markets to rise, momentum has taken a pause,” Genesis analysts wrote in a note.

Interest in cryptocurrencies has waned amid the price slump, which has seen bitcoin lose 70% from its all-time high of nearly $69,000 in November last year. Retail investors, in particular, are disenchanted with the asset class. They have not entered the market in the same way they did during the first two years of the pandemic, and Google searches for the word “crypto” have fallen to the lowest levels in the past year.

🍝 For the dinner table debate:

Mark Zuckerberg wiped $11 billion off his fortune after Meta Platfoms Inc shares plunged following another quarter of disappointing results. That means his total loss exceeds $100 billion in just 13 months.

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Zuckerberg now has a net worth of $38.1 billion, according to the Bloomberg Billionaires Index, a shocking drop from $142 billion in September 2021.

While many of the world’s richest saw their fortunes fall this year, the Meta CEO’s is the largest of all in the index.

“I understand that a lot of people might disagree with this investment,” Zuckerberg said of the company’s focus on the metaverse.

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The mogul owns more than 350 million shares of Meta stock, according to the company’s most recent proxy statement. At one point, he was as high as third in Bloomberg’s wealth index, behind Jeff Bezos and Bill Gates.

Leidys Becerra, a content producers at Bloomberg Línea, and Isabelle Lee and Vildana Hajric of Bloomberg News, contributed to this report.