A roundup of Friday’s stock market results from across the Americas
👑 Brazil’s Ibovespa leads in Latin America:
Latin American markets caught the US optimism and Brazil’s Ibovespa (IBOV) and Argentina’s Merval (MERVAL) led the gains, climbing 2.35% and 2.06%, respectively.
In Brazil, the shares of Cia Siderúrgica Nacional S.A. (CSNA3), Grupo de Moda Soma S.A. (SOMA3) and Gol Líneas Aéreas Int. (GOLL4) were the top performers.
A report filed by Bloomberg News noted that a Jair Bolsonaro victory in the presidential runoff could have benefits for state-owned companies, and Petrobras shares (PETR4) gained on Friday following Bolsonaro’s recovery in the latest opinion polls ahead of the October 30 runoff.
Argentina’s Merval also saw gains after a week of declines, bolstered by the strong performance of shares of Central Puerto S.A. (CEPU) and Telecom Argentina S.A. (TECO2).
Mexico’s S&P/BMV IPC (MEXBOL) closed 1.74% higher and Peru’s S&P/BVL (SPBLPGPT) climbed 1.57%.
Mexican bank Grupo Financiero Banorte (GFNORTEO) announced Friday it would withdraw from the bidding for the Banamex brand, which boosted the market and was described by Barclays analysts as “positive”.
Colombia’s Colcap (COLCAP) and Chile’s IPSA (IPSA) closed 0.74% and 0.16% higher, respectively.
🗽 On Wall Street:
Wall Street saw another day of big reversals, with stocks notching their best week since June after a Treasury rout sputtered. The yen jumped as Japan intervened again to prop up the currency.
The S&P 500 closed 2.37%, the Nasdaq Composite (CCMPDL) climbed 2.31% and the Dow Jones Industrial Average jumped 2.47%.
At a time when traders have been fixated on the outlook for interest rates, it’s no surprise that all the drama in the world’s biggest bond market would dictate sentiment. After being all over the place in early trading, equities climbed strongly as US yields fell from multiyear highs.
“The story this week is all about the volatility in rates, huge volatility in Treasuries,” said Keith Lerner, chief market strategist at Truist Advisory Services. “But I would say, overall, relative to how much interest rates have moved up, I would say the market has held in there pretty well.”
Traders also kept a close eye on the latest Fedspeak.
US central bankers said the next phase in their campaign to curb inflation will be to debate how high to raise rates and when to slow the pace of increases. St. Louis Fed President James Bullard and his San Francisco counterpart Mary Daly made clear they expect the discussion to be on the table at the November gathering while stressing the need to keep tightening.
Equity funds are still seeing inflows, with “final capitulation” not yet here, said Bank of America Corp. strategists. Global stock funds had inflows of $9.2 billion in the week through Oct. 19, according to a note from the bank citing EPFR Global data.
“The equity market is trying to form a bottom to get to the last leg of the bear market,” said David Donabedian, chief investment officer of CIBC Private Wealth US. “It feels like a two-way market right now. We have a tug of war going on between the skeptics and those who think it is time to own equities.”
He noted that the Fed is not done raising rates and valuations are still not as low as he would expect to see at the bottom of a bear market.
“We are just not there yet,” Donabedian added.
On the currency markets, the Bloomberg Dollar Spot Index fell 0.8%, the euro rose 0.8% to $0.9862, the British pound rose 0.6% to $1.1301 and the Japanese yen rose 1.7% to 147.66 per dollar.
🔑 The day’s key events:
Oil had a volatile week but maintained some weekly gains, even amid economic uncertainty and recessionary sentiments. West Texas Intermediate (WTI) for December delivery ended the day with a gain of 0.64% and a price of $85.05; while Brent for December settlement closed at a price of $93.28 and up 0.97%.
Dennis Kissler, senior vice president at Bok Financial Securities, noted that “the bullish side of tighter supplies, especially diesel, in the face of rising interest rates and a possible recession ahead is keeping a choppy and nervous trade in the crude space.”
In the crypto ecosystem, meanwhile, bitcoin (XBT) has spent just over two weeks trading below US$20,000. This is the first time it has spent so long below this threshold since it surpassed it in late 2020. The market’s largest cryptocurrency by value touched as high as US$18,969 at the start of the day, before finally returning to $19,179.90 at 17:37 p. m. (New York time).
🍝 For the dinner table debate:
Ralph Lauren announced it will immediately withdraw garments with designs of Mexican origin, after writer Beatriz Gutiérrez Müller, the wife of President Andrés Manuel López Obrador, accused the US company of plagiarizing designs from the country’s Indigenous communities.
The fashion industry giant said it had issued an order “months ago” to withdraw the garments from all its sales channels in the wake of the surprise that the product was being marketed.
“We are conducting an urgent audit to determine how this garment reached the sales floors after that directive,” the company told Bloomberg Línea in an email.
The brand said it announced in June that any new products using traditional Indigenous designs for the summer 2023 season would be created under a credit and collaboration model, in addition to deepening mandatory cultural awareness trainings and expanding its work with indigenous communities.
The organizations Impacto and Viernes Tradicional have documented at least 64 cases of cultural misappropriation of trademarks of traditional textiles made in Mexico between 2014 and 2022.
-- Sebastián Osorio Idárraga, a content producers at Bloomberg Línea, and Rita Nazareth of Bloomberg News, contributed to this report.