A roundup of Thursday’s stock market results from across the Amercias
🌎 Argentina’s Merval gains 1.97%:
Most regional bourses declined Friday, with Colombia’s MSCI index (COLCAP) leading the decline after closing down -1.14% at the end of the session. The Colombian stock market was affected by the downward performance of sectors such as finance (-1.94%), energy (-0.67%) and utilities (-0.51%).
According to Credicorp Capital Bolsa, the volume traded in the Colcap during the day amounted to US$9.4 million, and was led by BanColombia (PFBCOLO) and Ecopetrol (ECOPETL), with movements of US$7.02 million and US$47,000 respectively. Likewise, the shares with the greatest upward movement were Grupo Sura (GRUPOSUR) and Cementos Argos (PFCEMARG), with increases of 2.22% and 1.25% at the end of the session; and the shares that fell the most were those of BanColombia (-3.44%) and Compañía Colombiana de Inversiones (CELSIA), which dropped 2.90%.
The other markets fell at a slower pace: the Chilean stock exchange (IPSA) fell 0.80% and could not sustain the previous day’s gains; Mexico’s S&P/BMV IPC (MEXBOL) fell 0.61% at the close, after rising more than 1% on Wednesday; and the general index of the Lima Stock Exchange (SSPBLPGPT) fell 0.62%.
Only Argentina’s Merval (MERVAL) rose at the close of the day, in contrast to its Latin American peers. The market was driven by Banco Macro (BMA), BBVA (BBAR and Grupo Financiero Galicia (GGAL) shares, which rose 4.49%, 4.18% and 4.01%, respectively.
On Thursday, the Bank of Mexico (Banxico) continued its progress in restrictive terrain and kept the interest rate unchanged at 11.25% for the third consecutive time, as expected by analysts.
🇺🇸 On Wall Street:
Stocks struggled for direction amid bets that even if the Federal Reserve pauses its rate hikes in September, policy will remain tight to prevent a flare-up in inflation. Treasuries fell.
A renewed jump in longer-term US yields weighed on sentiment after a weak 30-year bond auction. Wall Street’s risk-on bid also faded as Fed Bank of San Francisco President Mary Daly told Yahoo! Finance the central bank still has “more work to do.” That’s even after data showed the core consumer price index had the smallest back-to-back increase in more than two years.
“The case is building for the Fed to keep policy rates unchanged in September,” said Seema Shah, chief global strategist at Principal Asset Management. “While inflation is moving in the right direction, the still-elevated level suggests that the Fed is some distance from cutting rates.”
The S&P 500 closed little changed after a gain that topped 1% earlier Thursday. Nvidia Corp., which has more than tripled this year, extended a three-day slide. General Motors Co. and Ford Motor Co. dropped on growing concern that demands from union leaders could send the automakers’ labor costs soaring. Walt Disney Co. rallied after saying capital spending and outlays for movies and TV shows are coming in lower than projected.
Treasury 30-year yields climbed after a $23 billion auction was awarded the highest rate since 2011. Two-year yields, which are more sensitive to imminent Fed moves, reversed an earlier slide. Benchmark 10-year yields rose about 10 basis points to 4.1%. The dollar gained. Oil’s rally, driven by increasing signs of a tightening market, paused as technical barriers stalled further advances.
“Today’s inflation report was reminiscent of the good old days. The Fed, therefore, might feel as if they’ve ‘stuck the landing’ and can pause as planned and not raise interest rates in September. That said, in our view, the economy continues to be carrying decent momentum, and as was reported last week, wage growth is still robust. So, while a pause is probable, a near-term pivot is not,” George Mateyo, chief investment officer at Key Private Bank, said.
The Bloomberg Dollar Spot Index rose 0.1%, the euro was little changed at $1.0980, the British pound fell 0.3% to $1.2676 and the Japanese yen fell 0.7% to 144.80 per dollar.
🍝 For the dinner table debate:
Nomura (NMR) cross-asset strategist Charlie McElligott suggests that a 1% move in the S&P 500, either up or down, occurring daily for a week, could put significant pressure on the current rally in US equities.
The risk escalation emanates from the elevated exposure of volatility control funds to equities. These funds, known as risk parity funds, have seen their susceptibility to potential liquidation increase due to their higher equity holdings, spurred by a quiet trading period of late.
When volatility control funds encounter phases of low volatility coupled with equity rallies, they tend to accumulate equities. However, this leads to a situation where they must divest when market conditions become turbulent, regardless of whether the market is going up or down.
-- Paola Villar S, a content producer at Bloomberg Línea, and Rita Nazareth of Bloomberg News, contributed to this report