¡A roundup of Wednesday’s stock market results from across the Americas
👑 Brazil’s Ibovespa leads in Latin America:
Brazil’s Ibovespa (IBOV) led the gains in Latin America, advancing against the current of Wall Street, climbing 1.97%, boosted by the shares of Itaú Unibanco (ITUB4), which rose 8.27% after announcing its fourth-quarter earnings on Tuesday, and Bradesco (BBDC4), Santander (SANB11) and BTG Pactual (BPAC11) shares also rose.
Petrobras’ (PETR3;PETR4) output report was keeping investors alert, and which was to be announced after the market closed, and amid fresh criticism of President Luiz Inácio Lula da Silva regarding the central bank’s autonomy and inflation goals.
📉 A bad day for Colombia’s Colcap:
Colombia’s Colcap index (COLCAP) saw the region’s sharpest losses on Wednesday, falling 0.47%
Shares of Cementos Argos (CEMARGOS), Canacol Energy (CNEC) and Banco de Bogotá (BOGOTA) had the sharpest losses.
Michel Janna, president of Colombian securities market regulator AMV told Bloomberg Línea that a poorly executed pension reform may leave President Gustavo Petro’s government without the financing required for the execution of the social projects he plans to implement during his four-year term.
Janna said in an interview that a pension reform that affects the fixed income market may leave the financing received annually from the private pension funds by the government, very compromised.
“Some baselines have been announced and are being worked on. Any of the versions that have been aired point to a greater participation of the State in the Colombian pension system. This would be towards a pay-as-you-go scheme and not an individual savings scheme. This signal alone will be negative for the market because any reform that takes away the flow of private pension funds to invest in the capital market will have an impact on the assets traded there. Details are yet to be defined, but one would think that there could be impacts that are not very positive”, Janna said.
The president of the AMV assures that, although the fixed income market must be protected, this is also a market that in the last decade has lost much of its liquidity.
🗽On Wall Street:
A selloff in tech stocks weighed heavily on trading Wednesday, with the most-recent string of Federal Reserve speakers reinforcing the idea that interest rates will need to keep climbing to quash inflation.
Their tone was unmistakably intended to catch the market’s attention in what looked like a concerted effort to weigh against very risk-friendly interpretations of Jerome Powell’s interview on Tuesday, noted Krishna Guha at Evercore ISI. From Fed Bank of New York President John Williams to his Minneapolis counterpart Neel Kashkari and Governor Christopher Waller, the message was clear: policy may need to be tight for a while.
Those remarks just gave credence to the recent hot trade in the rate-options market — where several big wagers on the Fed’s benchmark reaching 6% have popped up. That’s nearly a percentage point higher than consensus. For several market observers, such hawkish positioning makes it tough for equities to keep grinding higher — especially after the rally that brought the S&P 500 to overbought territory.
Another aspect is that while Powell has refrained from pushing back on the stock surge that has contributed to a recent easing in financial conditions, other policymakers may indeed embrace tougher talk to put a lid on gains. That’s the perception of Lisa Shalett at Morgan Stanley Wealth Management, who says the recent rally in the face of worsening earnings and economic expectations has produced “massive disconnects” that threaten market stability.
“Even though we shifted early this year from ‘cautious’ to ‘cautiously constructive,’ adding back to stocks for the first time in 18 months, we continue to expect market volatility ahead as news flow on earnings, inflation, the economy, and Fed bounces from bullish to bearish and back again,” wrote Stephen Auth, chief investment officer of equities at Federated Hermes.
The S&P 500 fell over 1%, almost wiping out its previous session’s rally. The Nasdaq 100 (CCMPDL) dropped 1.68%, with Google’s parent Alphabet Inc. (GOOG) down more than 7% on concern that its new artificial intelligence chatbot Bard may yield inaccurate responses. Some other megacaps like Apple Inc. and Amazon Inc. also slumped, while Microsoft Corp.’s erased gains that briefly put the software giant’s market value above $2 trillion.
To Troy Gayeski at FS Investments, it will be a challenging environment for equities and fixed income for quite some time.
“When you think of equity markets, we think it’s going to be a choppy, sloppy mess as far as the eye can see,” he said. “It’s been a buoyant start to the year. And when you actually scratch your head, what’s actually causing it? The thing to remember is the most powerful rallies are always in bear markets because people underinvest and you have short covering that starts, and you start to suck people in to new bullish narratives.”
Walt Disney Co. posted first-quarter profit that beat estimates, thanks to a strong performance from theme parks and smaller-than-expected losses in streaming.
Chief Executive Officer Bob Iger announced plans for a dramatic restructuring of the world’s largest entertainment company that includes cutting 7,000 jobs and $5.5 billion in cost savings.
Mattel Inc. reported fourth-quarter results that missed Wall Street projections after the holiday season was slower than the company expected — missing guidance that the owner of Barbie and Hot Wheels brands had lowered in October.
Elsewhere, Turkey’s stock exchange suspended trading for the first time in 24 years following a selloff that erased billions of dollars from the value of its main equities gauge in the wake of two devastating earthquakes. Trading in Turkish equities, futures and option contracts will resume on Feb. 15.
The Bloomberg Dollar Spot Index rose 0.1%, the euro fell 0.1% to $1.0714, the British pound rose 0.1% to $1.2066 and the Japanese yen fell 0.3% to 131.42 per dollar.
🍝For the dinner table debate:
NBA star LeBron James added another milestone to his extensive basketball resume and became the all-time leading scorer in NBA history after scoring 38 points in a Los Angeles Lakers game.
But another of his milestones is off the court: amassing a fortune of more than $1 billion while still dominating the league at the age of 38.
James has a net worth of around $1.1 billion, according to the Bloomberg Billionaires Index, which has begun tracking his fortune for the first time. It is made up of his NBA salary (tens of millions a year in recent seasons) as well as sponsorships, investments and his sports entertainment business SpringHill Co.
Nicknamed “King James” since his prodigious high school career led the Cleveland Cavaliers to pick him first in the 2003 NBA draft, James has long said he wanted to be a billionaire. He has hobnobbed with corporate executives and dined with Warren Buffett, who advised him in a 2015 television interview to “make monthly investments in the low-cost index fund.”
Leidys Becerra, a content producer at Bloomberg Línea, and Rita Nazareth of Bloomberg News, contributed to this report.