Argentina’s Merval Maintains LatAm Lead; Nasdaq Scores Year’s Longest Upward Streak

A roundup of Friday’s stock market results from across the region

👑 Latin America’s Leader:

Argentina’s stock market continued to outpace its Latin American peers on Friday and the main index of the Buenos Aires market completed four consecutive sessions of gains. The Merval (MERVAL) rose more than 3% after Thursday’s session had marked its largest daily increase since 2020.

Hikes by shares of Ternium Argentina (TXAR), Byma (BYMA) and Aluar Aluminio (ALUA) contributed to the good performance of the Argentine index.

However, market analysts have pointed out that the rise has no reasonable grounds, in the midst of the uncertainty that the country is experiencing after the changes at the head of the Ministry of Economy and the fissures within the ruling party.

Rather, the daily increase of the Merval is related to the performance of the exchange rate, according to Gustavo Neffa, director of Research for Traders.

The upward trend was also seen in the Mexican stock exchange, which despite a volatile day, close with a 0.44% gain.

The S&P BMV/IPC (MEXBOL) rebounded and performed positively thanks to the performance of the real estate, finance and industrial sectors.

📉 A Bad Day:

The Brazilian stock market failed to follow the trend of practically all Latin American markets and closed the session in the red.

The health, materials and information technology sectors had the worst performance, impacting the Ibovespa (IBOV), which ended the session down 0.44%, as investors digest June inflation data.

In the sixth month of the year, the consumer price index advanced 0.67%, mainly influenced by the 0.80% increase in the food and beverage segment.

Although the index increase was lower than expected, data such as services remain very strong and keeps investors on their toes. Inflation for the year stands at 5.49% and for the last 12 months at 11.89%.

🗽 On Wall Street:

US stocks notched a weekly gain after a strong jobs report alleviated recession fears but cleared the path for the Federal Reserve to keep raising interest rates to fight inflation.

The S&P 500 closed flat on Friday after struggling for direction throughout the session. Treasuries slumped, with the two- and 10-year yield curve remaining inverted for the fourth straight day. The Bloomberg Commodity Index suffered its longest streak of weekly losses since March 2020.

The Nasdaq Composite (CCMPDL) rose 0.12% on its fifth consecutive day of gains, its longest winning streak this year, closing the week 4.5% higher

The jobs report reaffirmed the strength of the economy, fueling the Fed to stay aggressive to combat inflation. The moderation in the number of jobs, however, was seen as a positive sign as the central bank seeks to engineer a soft landing. A handful of Fed officials, including two of its most hawkish policy makers, said this week that they supported raising interest rates by 75 basis points for a second month in a row. Recent data also signaled to investors that worries about a recession were overblown, a claim echoed by Fed officials this week.

“The economy is slowing but the Fed wants it to slow. So I think all the recession talk is a little bit premature right now,” Priya Misra, global head of rates strategy at TD Securities, said on Bloomberg TV. “Inflation is still a problem and the Fed has changed their reaction function, I would argue. They are emphasizing – overemphasizing – headline inflation over the labor market right now.”

Federal Reserve Bank of New York President John Williams reiterated the bank’s inflation target on Friday.

Bitcoin rose and is trading around $21,000.

🔑 The Day’s Key Events:

Oil prices rebounded for the second consecutive day, but Friday’s performance was not enough to offset the market’s accumulated weekly decline.

The two main benchmarks, WTI and Brent, remained above $100 but closed down more than 3% for the week as investors remain wary of the possibility of whether or not an economic downturn could hit oil demand.

“We believe it is premature for commodities to succumb to recession concerns when the global economy continues to grow and markets remain in deficit due to strong demand,” Goldman Sachs (GS) analysts said in a note to clients viewed by Bloomberg.

🍝 For the Dinner Table Debate:

Former prime minister of Japan Shinzo Abe died on Friday after being shot while participating in a campaign event.

Abe, 67, was shot from about 10 feet away with wa homemade firearm in an act that shocked a country where political violence and gun attacks are rare.

Local authorities revealed that the gunman was Tetsuya Yamagami, a 41-year-old former member of the Japan Maritime Self-Defense Force. His motives are still unclear, although according to local broadcaster NHK, Yamagami reportedly told police that he was “frustrated” with the politician and had planned to kill him.

Abe was Japan’s longest-serving prime minister, during which time he helped pull the economy out of a cycle of deflation, with policies that were later labeled ‘Abenomics’; he dealt with the Donald Trump administration and worked to improve ties with Japan’s largest trading partner, China.

The former prime minister was attacked while delivering a campaign speech for the ruling Liberal Democratic Party (LDP) ahead of the Upper House elections to be held on Sunday.

-- Carlos Rodríguez Salcedo, a content producer for Bloomberg Línea, and Isabelle Lee of Bloomberg News, contributed to this report