Brazil’s Ibovespa Leads LatAm Gains; Corporate Earnings Buoy US Stocks

Argentina’s Merval was the only Latin American index to close lower on Tuesday, while the NYSE closed with gains amid optimism inspired by companies’ earnings reports

Stock activity on an electronic board at the Brasil Bolsa Balcao (B3) stock exchange in São Paulo, Brazil. Photographer: Patricia Monteiro/Bloomberg
By Bloomberg Línea and Bloomberg News
October 18, 2022 | 07:46 PM

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A roundup of Tuesday’s stock market results from across the Americas

👑 Brazil leads in Latin America:

La mayoría de las bolsas de América Latina cerraron la jornada bursátil con ganancias, siguiendo el buen ánimo del mercado estadounidense.

Brazil’s Ibovespa (IBOV) led the gains in the region, climbing 1.87% after a boost from shares in the tech, healthcare and energy sectors.


Shares of Natura & Co Holding (NTCO3), Vibra Energía (VBBR3) and Locaweb Servicios de Internet (LWSA3) were among the best performers.

Colombia’s Colcap (COLCAP) had the second best performance of the day, bolstered by consumer discretional, energy and finance sector shares.

After showing a monthly deceleration in July and dropping 0.3%, the Colombian economy rebounded in August. Colombian activity grew 8.6% annually in the eighth month of the year with a monthly rebound of 1.4%, according to statistics bureau DANE’s Economic Monitoring Indicator (ISE).

The three main activities that most contributed to the growth of the Colombian economy in August were: commerce, transportation, accommodation and food services, according to the ISE.


📉 A bad day for Argentina’s Merval:

Argentina’s Merval (MERVAL) dropped 1.02%, the sharpest decline in the region on Tuesday, with shares of Cresud (CRES), Central Puerto (CEPU) and Transportadora de Gas del Norte (TGNO4) seeing the sharpest declines.

“Equities failed to keep pace with Wall Street and ended the day mostly in the red considering the leading panel. Among the highlights, Loma Negra (LOMA) saw a boost of more than 3%, while the biggest fall was for Cresud with a drop of more than 3%”, said Ayelen Romero, account executive at Rava Bursátil.

🗽 On Wall Street:

US stocks continued their rebound from nearly oversold levels as traders took solace from a solid start to the corporate-earnings season even as central banks remain on hawkish footing.

After almost giving up all of its gains, the S&P 500 notched back-to-back gains to start the week. Futures extended the advance in late trading after Neflix Inc. delivered a surge in subscribers. Its shares jumped more than 13% as of 4:40 p.m. in New York. The biggest ETF that tracks the Nasdaq 100 advanced more than 1%. United Airlines Holdings Inc. climbed 7% after reporting its results.

The S&P 500 closed 1.14% higher, accumulating a 3.8% hike over two days, as Goldman Sachs Group Inc. (GS) shares climbed due to its solid financial results and Apple Inc. (AAPL) shares recovered from a short decline after the company announced it was reducing production of the iPhone 14 plus.

The Dow Jones Industrial Average gained 1.12% and the Nasdaq Composite (CCMPDL) 0.90%.


“Earnings season offers investors the opportunity to focus more on the actual earnings power of corporate America, and less on the machinations of the backward-looking economic data stream,” said Art Hogan, chief market strategist at B. Riley. “A better-than-feared earnings season may well be the catalyst the market needs to see a break in the steady grind lower.”

Upbeat company results, cheaper valuations and UK policy reversals have helped buoy risk sentiment. The sentiment on stocks and global growth among fund managers surveyed by Bank of America Corp. shows full capitulation, opening the way for equities to bottom in the first half of 2023.

Still, with headwinds from inflation, risks to the economy and hawkish central banks continuing to confront investors, there’s debate over how durable the gains will prove.

Some regional Fed directors last month favored raising a key interest rate by a smaller or larger amount than the 75 basis points that policymakers ultimately decided was needed to curb persistent inflation, according to minutes of discount-rate meetings released Tuesday.


“There’s still a strong feeling of a bear-market rally about trading over the course of the last week,” said Craig Erlam, senior market analyst at Oanda Europe Ltd. “The economic landscape looks treacherous and we don’t even know if we’re at peak inflation and interest rate pricing yet. Those are substantial headwinds that will make any stock market rebound extremely challenging.”


On the currency markets, the Bloomberg Dollar Spot Index was little changed, the euro rose 0.2% to $0.9856, the British pound fell 0.3% to $1.1323 and the Japanese yen fell 0.1% to 149.23 per dollar.

🔑 Key events of the day:

Both West Texas Intermediate (WTI) and Brent crude oil prices fell this day to $82.82 and $90.64, respectively, marking the second downward session of the week for crude oil.

Part of this behavior is explained by the movements of strategic reserves implemented by the United States to reduce fuel prices. Although WTI was able to reduce part of the losses after the announcement in which Mexico assured that it completed its hedging program for 2023, guaranteeing the country’s oil revenues in case prices fall below $68.70 per barrel.


On the other hand, OPEC+ members today defended their decision to cut oil production, saying they were justified by the growing risk of a global recession. The group recently agreed to reduce its collective crude production target by 2 million barrels per day.

“Crude oil prices fell as energy traders expect the Biden administration to remain aggressive with more releases from its strategic oil reserves. With the midterm elections less than a month away, President Biden wants energy prices to trend in the right direction,” explained Edward Moya, an analyst at Oanda.

🍝 For the dinner table debate:

A number of Wall Street economists are sticking to their bets that US inflation will slow substantially over the next year, and despite the fact that they continue to raise their predictions of accelerating prices for the months ahead.


Economists had raised their bets for the coming quarters before last month’s reading, in which core inflation rose to 6.6% year-on-year, a 40-year high. But despite all this, many believe the Fed’s monetary tightening cycle will eventually drive prices much closer to its 2% annual target.

Bloomberg’s most recent monthly survey of economists, the underlying personal consumption expenditures price index will show an average annual increase of 2.8% in the fourth quarter of 2023 and 2.6% in the first quarter of 2024. The Federal Reserve’s own forecasts paint a similar picture: they expect an average core index of 3.1% in 2023 and 2.3% in 2024.

However, some economists have their doubts. Stephen Stanley, chief economist at Amherst Pierpont Securities LLC, believes “we’d be lucky” if core CPI fell to 4% year-over-year by the end of next year.

-- Leidys Becerra and Sebastián Osorio Idárraga, content producers at Bloomberg Línea, and Stephen Kirkland of Bloomberg News, contributed to this report.