:quality(75)/cloudfront-us-east-1.images.arcpublishing.com/bloomberglinea/K37UBWKFB6OEPIHV6RNVLSWUQE.jpg "Traders work on the floor of the New York Stock Exchange (NYSE) in New York, US, on Monday, March 20, 2023. Photographer: Michael Nagle/Bloomberg")
A roundup of Tuesday’s stock market results from across the Americas
🌎 Majority of Latin American markets close lower:
Argentina’s Merval index (MERVAL) broke away from the declines suffered by the majority of the region’s markets on Tuesday, climbing 1.21%, boosted by the shares of Ternium Argentina (TXAR), Aluar Aluminio Argentino (ALUA) and Banco de Valores (VALO).
In Argentina, the exchange tension continues, and the ‘blue dollar’ soared again Tuesday. After having climbed more than 5% during yesterday’s trading day, the currency traded in the informal market climbed again strongly and reached $490 for purchase and $495 for sale, a new historical nominal record.
Thus, so far in April, it has risen by 103 pesos, or more than 25%, and widens the exchange rate gap with respect to the official wholesale dollar ($220.85) to more than 125%. For the current month, it should be recalled that private consulting firms already expect inflation to be above 7%.
The acceleration of the parallel exchange rate is nothing more than a reflection of the political and economic uncertainty that the country is going through, in a context of scarcity of reserves, drought, acceleration of inflation and growing devaluation prospects.
On the other hand, Colombia’s Colcap (COLCAP) was the region’s indicator that fell the most during the session after dropping 2.25%, dragged down by the performance of the energy sector, especially Ecopetrol (ECOPETL) shares, which fell 6.29%.
Ecopetrol shares have been falling since last Friday after the beginning of the company’s ex-dividend period and after the official arrival of Ricardo Roa as president of the company.
Given that shareholders who have acquired the company’s shares between Friday and Wednesday will not be entitled to receive the dividends decreed by the assembly, it was foreseeable that the shares would lose ground in the BVC equity market.
However, although the new shareholders will not receive the dividend of $197.6 per share, the company’s shares have already lost almost an additional $100. That is to say, the fall of the share should be close to the $197.6 that shareholders who entered in recent days will not receive, however, the fall is $285.
The reason, some experts explain, is due to the recent declarations of the new president Ricardo Roa, in which, aligned with the vision of Gustavo Petro’s government, he speaks of not signing new contracts for oil exploration in Colombia.
🗽On Wall Street:
US stocks dropped the most in two months and Treasury yields retreated after First Republic Bank’s disappointing earnings and potential assets sale rekindled worries that the banking crisis has not run its course.
The S&P 500 lost 1.6% Tuesday, with First Republic’s 49% plunge taking the lender’s shares to a record low. Bloomberg News reported the troubled bank, which saw greater-than-expected withdrawals in the first quarter, is exploring divesting up to $100 billion of long-dated mortgages and securities as part of a broader rescue plan.
The Dow Jones Industrial dropped 1.02%, and the Nasdaq Composite (CCMPDL) 1.98%.
After trading, the shares of big tech companies rose, with Microsoft Corp. (MSFT) and Alphabet Inc. (GOOGL) having posted better than expected results during the day.
The two-year Treasury yield tumbled to 3.94% as investors sought the safety of US government debt. Meanwhile, tech stocks rallied in after-hours trading with Microsoft Corp. and Alphabet Inc. higher after better-than-expected earnings.
The Federal Reserve is still expected to raise interest rates by a quarter percentage point when it meets next week, though signs are mounting that the American economy is starting to sputter after a year of aggressive tightening. Data Tuesday showed consumer confidence slipped, while two regional Fed manufacturing reports underwhelmed.
“US regional banks still face headwinds, and signs of stress in the system have not fully subsided,” Ken McAtamney, portfolio manager and head of William Blair’s Global Equity team, wrote. But despite the instability in the financial sector, “the US Federal Reserve and global central banks remain vigilant in their fight against inflation.”
“The sugar high from the Covid stimulus has ended. Now companies are having to contend with a more challenging economic environment following a big batch of Fed rate hikes,” Kelly Bogdanova, vice president and portfolio analyst at RBC Wealth Management, said in an interview. “From our perspective, we’re staring an earnings recession in the face.”
The market is now pricing a peak for US interest rates in June, followed by a cut to below 4.5% by year end.
“Investors need to spend a little more time using common sense … and adjust their portfolios to the reality that a soft landing in the economy this year is a pipe dream,” wrote Matt Maley, chief market strategist at Miller Tabak + Co, in a morning note.
There’s a growing consensus a recession is near, especially with signs of a credit crunch in results from First Republic and UBS, Maley said. “When was the last time a material contraction in credit did not result in a recession? The answer: Never!” he wrote.
A Bloomberg gauge of the dollar climbed. The Stoxx Europe 600 index dropped 0.4%. Oil fell, gold was little changed, iron ore extended a losing streak to a fifth day, and Bitcoin slid for a third day.
On the currency markets, the Bloomberg Dollar Spot Index rose 0.4%, the euro fell 0.7% to $1.0970, the British pound fell 0.7% to $1.2403 and the Japanese yen rose 0.5% to 133.51 per dollar.
🍝 For the dinner table debate:
Apple Inc. (AAPL) is working on a new service called Quartz, which uses AI and data from the Apple Watch to make exercise, diet and sleep suggestions tailored to each user.
According to sources with knowledge of the matter, the coaching service is part of the company’s broader health push focused on core wellness features on its devices, including the expansion of the health app to the iPad and features to help people with vision problems.
The Quartz initiative is similar to LumiHealth, a coaching service Apple launched with the Singapore government in 2020, except that the new service will have a monthly fee and will be a standalone app.
The service is planned for next year, but could ultimately be canceled or postponed. The project is being pushed by several Apple groups, including its health, Siri and AI teams, as well as its services division.
In the near term, Apple plans to release an iPad version of the iPhone’s health app for the first time. The change, which will allow users to view EKG results and other health data in a larger format, is scheduled to be included as part of iPadOS 17 later this year.
Leidys Becerra, a content producer at Bloomberg Línea, and Isabelle Lee, Peyton Forte and Carly Wanna of Bloomberg News, contributed to this report.
