A roundup of Thursday’s stock market results from across the Americas
👑 Argentina’s Merval maintains upward trend:
Only Argentina’s Merval (MERVAL) and Brazil’s Ibovespa (IBOV) closed with gains in Latin America on Thursday, climbing 1.45% and 0.11% respectively.
Argentina’s index was buoyed by the shares of Banco Supervielle (SUPV) and Edenor S.A. (EDN), which gained 6.7% and 4.7%, while the Ibovespa was boosted by Petrobras (PETR4) shares, which rose 1.78% as the market analyses the cabinet picks announced Thursday by President-elect Luiz Inácio Lula da Silva.
📉 A bad day for Colombia and Chile:
Colombia’s Colcap (COLCAP) suffered the biggest losses of the day, of 1.78%, after underperformance of stocks in the utilities and finance sectors. Interconexión Eléctrica S.A. (ISA) shares fell 4.72% on Thursday.
Colombia’s Finance Minister José Antonio Ocampo stated that in 2023 there will be a lower fiscal deficit, that the Fiscal Rule is complied with and that the goals in this matter are lowered.
“The total deficit decreases 0.2 percentage points to 3.8% of the GDP, consistent with a primary surplus of 0.6% of the GDP, exceeding the expected result in the scenario consistent with the budget,” he said.
Chile’s Ipsa (IPSA) also retreated 0.90% on the day following the underperformance of materials and industrial company shares.
Fitch Ratings noted in a report for its clients that “Chilean companies are grappling with a rapidly deteriorating macroeconomic environment that is expected to bottom out in 2023″, noting that political uncertainty in the country would hold back investments next year.
Peru’s S&P/BVL (SPBLPGPT) lost 0.77% and Mexico’s S&P/BMV IPC (MEXBOL) fell 0.65%.
🗽On Wall Street:
US stocks dropped on Thursday as investors digested data validating the Federal Reserve’s assertion that the economy is robust enough to withstand more tightening. Technology stocks were battered after a gloomy outlook from chipmaker Micron Technology Inc. weighed on sentiment.
The S&P 500 closed the session down 1.5%, after falling as much as 3% during trading hours. The tech-heavy Nasdaq 100 declined as much as 4%, but pared its drop to end Thursday down 2.5%. The dollar gained the most in a week. The policy-sensitive, two-year Treasury yield climbed to around 4.27%. Oil snapped a three-day rally.
The Dow Jones Industrial Average lost 1.05% at the end of trading.
Data released on Thursday painted a picture of a resilient economy, stoking concern that the Fed has a longer way to go to subdue inflation. Initial jobless claims rose less than forecast in the week ended Dec. 17, underscoring the strength in the labor market. Third-quarter gross domestic product was revised to 3.2% — compared with a previously reported 2.9% advance — on firmer spending.
“Today’s data is telling us that the consumer has a lot more strength than I think what the market was pricing in,” Priya Misra, head of global rates strategy at TD Securities, said on Bloomberg Television. “When the accumulated savings they’ve had since Covid, when that runs out, which we think happens by the middle of next year, that’s when consumer spending slows down.”
US inflation is going to be “sticky” on the way down because the labor market has remained resilient so far, Misra said. That’s going to keep the Fed firmly on its path of rate hikes, she said.
“So we actually think that the Fed is going to be hiking all the way up until May to reach 5.5%, and then be very reluctant to ease policy,” she said. “I mean, we have a recession in our base case, but we think the Fed is going to be very late in terms of when they can start to ease because of that sticky inflation.”
Bearish comments from investor David Tepper, who told CNBC he’s “leaning short” on US equities next year because of global tightening, added to the risk-off sentiment on Thursday.
The S&P 500′s large decline this month contrasts with an average 1.5% December gain since 1950, providing sidelined global investors with plenty of “dry powder” to put to work, according to analysts at SEB. Meanwhile, technology stocks are headed for their worst December since the bursting of the dotcom bubble 20 years ago.
Concerns are also growing that Japanese investors could be persuaded to bring home some of the trillions of dollars they have stashed in foreign stocks and bonds as the yen and local bond yields rise in the wake of this week’s sudden hawkish move from the Bank of Japan. That could further lift global borrowing costs and drag on already cooling economic growth, with euro zone bonds seen as especially vulnerable.
On the currency markets, the Bloomberg Dollar Spot Index rose 0.1%, the euro was little changed at $1.0599, the British pound fell 0.3% to $1.2042 and the Japanese yen was little changed at 132.38 per dollar.
🔑 The day’s key events:
Oil cut its three-day climb it had registered in the week after the US data release, with the strength of the economy likely leading to further monetary tightening.
WTI crude for February delivery fell 1.02% to $77.49 per barrel, while the Brent benchmark lost 0.62% toS$81.69 per barrel.
Despite the declines, tightening US crude supplies and the prospect of China’s recovery from blockades controlled losses; and although participation in oil markets has declined ahead of the Christmas vacations, liquidity has been thin for much of this year, adding to volatility.
“Energy traders seem to be ready for the holidays, as we are not seeing any exciting moves. The biggest wild card in the oil market is China and optimism remains strong that the reopening will continue and eventually lead to increased demand for crude,” said Ed Moya, senior market analyst at OANDA.
🍝For the dinner table debate:
TikTok’s parent company, ByteDance Ltd has determined that some of its employees accessed US user data inappropriately, further complicating the company’s efforts to convince lawmakers in the country that the app is safe.
“The individuals involved abused their authority to gain access to TikTok user data,” Shou Chew, CEO of the popular video-sharing mobile app, told employees in a memo seen by Bloomberg.
The accesses were noted in an internal ByteDance investigation conducted in the northern summer to uncover employee leaks to the press. Internal audit members responsible for the investigation accessed personal data from some journalists’ accounts, including IP addresses, to try to determine whether they had interacted with TikTok employees, according to an email sent by TikTok’s lead attorney, Erich Andersen.
The company launched another investigation after a Forbes article claimed that ByteDance employees planned to use TikTok to track the physical location of some US users.
Leidys Becerra, a content producer at Bloomberg Línea, and Vildana Hajric of Bloomberg News, contributed to this report.