Argentina’s Merval Leads LatAm Market Gains; US Futures Gain Following Debt Deal

A roundup of Monday’s stock markets results from across the Americas

Argentina’s Merval leads the gains in Latin America:

Argentina’s Merval (MERVAL) posted the highest gains on a mixed day for Latin America on Monday, and after two days’ holiday for Argentina, with the index boosted Monday by the shares of Cablevisión (CVH), which rose 6.50%.

“Also, the local market today was without the US market as a reference due to the Memorial Day holiday. This resulted in a cautious market in which the leading panel ended the day with most assets up,” wrote Priscila Bruno, analyst at Rava Bursátil, in a note.

Brazil’s (IBOV) and Chile’s IPSA (IPSA) dropped 0.52% and 0.19% respectively, on a day of low trading volumes due to the US stock market holiday.

In Brazil, shares related to the IT and utilities sectors were the hardest hit, with shares of Vibra Energía S.A. (VBBR3) and de Brasil Foods S.A. (BRFS) falling 3.91% and 2.98% respectively.

On Monday, and after almost five months since taking office, Brazil’s President Luiz Inácio Lula da Silva received Nicolás Maduro in Brasilia where they formally reestablished relations that had been broken between the two states since 2019, when Jair Bolsonaro expressed his support for Venezuelan opposition leader Juan Guaidó as interim president.

Lula described Bolsonaro’s stance as “political mistakes” and recalled his close relationship with the late President Hugo Chávez, in the middle of his administration between 2003 and 2010.

“It is absurd that Venezuela’s gold reserves are in the hands of a guy like Juan Guaidó, it is absurd that the European Union recognizes an impostor like him as president of a country,” he said.

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🗽On Wall Street:

US stock futures made some gains on Monday amid optimism that a tentative debt ceiling deal has been approved and the country’s default avoided, which has been repeatedly announced by Treasury Secretary Janet Yellen.

Contracts on the S&P 500 and the Nasdaq Composite (CCMPDL) were each up 0.3% on a day when markets did not trade due to Memorial Day.

“I never say I’m confident about what Congress will do, but I feel very good about it (...) I’ve talked to several of the members. I talked to McConnell. I talked to a lot of people. And it feels good. We’ll see when the vote starts,” President Joe Biden told the media on Monday, referring to Senate Minority Leader Mitch McConnell.

Positive sentiments from congressional approval of the US debt ceiling extension also impacted oil, which posted another day of gains. WTI futures rose above $73 per barrel.

Meanwhile, Asian bourses were poised for a narrow opening on Tuesday, awaiting discussions in the US Congress.

Futures in Japan and Australia were pointing to minimal moves when those two markets opened, while Hong Kong contracts suggested further declines, Bloomberg reported.

🍝 For the dinner table debate:

A shakedown is looming in the $1.6 trillion sovereign fixed income sector of developing countries, whether Wall Street likes it or not.

As government defaults rise to a record high in emerging countries, tension mounts over how to resolve these problems. Restructuring negotiations stall, with some countries opting for classic sweeteners and others calling for a renewal of the G-20 Common Framework.

A group of activists and policymakers in New York City are advocating a more lasting solution: the passage of a law overhauling the sovereign debt refinancing procedure.

“There is a lot of interest behind Covid-19 on debt issues and progress,” explains Deborah Zandstra, a partner at the law firm Clifford Chance, which advises several investors. “Civil society organizations are running numerous campaigns about how to optimize the kind of ad hoc structures that exist for debt restructuring.”

Sebastián Osorio Idárraga, a content producer at Bloomberg Línea, contributed to this report.