Chile Leads LatAm Market Gains; Tech Shares Push NYSE Higher

Peru’s stock market saw the sharpest losses in Latin America on Thursday, while tech shares pushed Wall Street into the green

Pedestrians pass in front of the Santiago Stock Exchange in downtown Santiago, Chile.
By Bloomberg Línea
January 26, 2023 | 09:55 PM

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A roundup of Thursday’s stock market results from across the region

👑 Chile’s IPSA leads LatAm gains:

Latin American stock markets closed mixed again on Thursday, with Chile’s Ipsa (IPSA) posting the highest gains, climbing 1.46%, driven by the good performance of the materials, industry and utilities sectors. Shares of Sociedad Inversiones Oro Blanco (OROB), Quinenco (QUINENC) and Banco Santander de Chile (BSAN) led the gains.

On Thursday, the board of the central bank of Chile (BCCh), headed by its president Rosanna Costa, decided to maintain the key interest rate at 11.25% to control high inflation, the second consecutive time that no change has been made to the rate, keeping it at its highest level in two decades.


“Global inflation has declined at the margin, mainly associated with lower energy prices. Nevertheless, inflation persists at elevated levels and inflationary pressures remain significant. In this context, major central banks have continued to raise their benchmark interest rates. Growth prospects for 2023 remain weak, even though they show a limited upward adjustment,” the central bank said in a statement oThursday.

All the board members agreed to maintain the high levels of borrowing costs. The decision does not surprise the market, which estimates that a series of cuts will only be possible starting in April. But monetary policymakers gave no indication of any reductions in the near future.

📉 A bad day for Peru’s stock market:

Peru’s S&P/BVL Peru (SPBLPGPT) posted the sharpest losses in the region, falling 0.84%, dragged down by the poor performance of the materials sector.

Shares of Corporación Aceros Arequipa (CORAREI1), Southern Copper (SCCO) and Intercorp Financial Services (IFS) led the session’s losses.


In the country’s political agenda following the protests in front of the US embassy in Peru that took place last Wednesday, the US ambassador to the Organization of American States (OAS), Francisco Mora, denied that the US is interfering in the Peruvian political and social crisis, and stressed that Washington will support the political process and the dialogue to solve the complex situation in the South American nation.

“Obviously there has been no US intervention in Peru, that is false, completely false. We are supporting the political process and a dialogue (in Peru), that is what the OAS has also said. There are going to be cases of people who will want to use the United States as a weapon or political tool (...) but in no way has there been any intervention in the way that some have said,” ambassador Mora told Bloomberg Línea.

🗽On Wall Street:

Tech megacaps powered a stock-market rebound, tempering data suggesting that while the Federal Reserve still has a path to a soft landing, the risk of a recession this year is very much alive.

The S&P 500 closed at its highest since early December. Tesla Inc. topped the $500 billion mark, leading gains in the Nasdaq 100 as Elon Musk teased potential for the carmaker to produce 2 million vehicles in 2023. In late trading, chipmaker Intel Corp. tumbled on a bleak forecast.

The S&P 500 climbed 1.10%, the Nasdaq Composite (CCMPDL) 1.76% and the Dow Jones Industrial Average 0.61%.

US gross domestic product expanded at a faster-than-estimated pace into the end of 2022, but there were signs of slowing underlying demand as the steepest rate hikes in decades threaten growth. The Fed is expected to boost rates by 25 basis points next week amid bets the central bank is approaching the end of its tightening cycle. Yet officials are signaling that rates will stay high through the rest of this year.


The economy continues to be very resilient in the face of rate increases, but plenty of risks lie ahead, so “we wouldn’t be so quick to blow the all clear,” said Chris Zaccarelli at Independent Advisor Alliance.

“That said, this year’s stock-market rally is impressive and shouldn’t be ignored,” the firm’s chief investment officer added. “Unfortunately, the Fed is likely to start talking down the market again, as early as next week, so prepare for volatility. We may be in the eye of the hurricane and not completely out of the woods yet.”

To Chris Gaffney, president of world markets at TIAA Bank, the recent data show the Fed is doing a good job, “but there’s more work to be done.”

A team led by Deutsche Bank AG’s Binky Chadha is maintaining its view that the S&P 500 can rise to 4,500 by the end of the first quarter, about 11% above Thursday’s close, before sliding amid an economic contraction. The benchmark is headed for its best January since 2019.


However, it seems like many investors still don’t have the appetite to chase the rally.


Some 35% of clients in a recent JPMorgan Chase & Co. survey said they plan to add to stock holdings in the coming weeks. That’s a hair away from a 33% reading in late November that marked an all-time low.

Investors fretting about the prospects for global earnings growth may want to brace for a long slog this year, and stiff headwinds to equities as a result.

Analysts’ estimates for 2023 profits continue to fall, with major regions showing negative revision momentum, according to research from Bloomberg Intelligence’s Gina Martin Adams and Gillian Wolff. In the US, for example, sell-side analysts have lowered projections by more than half since September, while the outlook for emerging markets has slumped even more.


Meantime, Thursday’s auction of seven-year Treasury notes ensured that January will be one of the best months ever for US government debt auctions. The high demand reflects investor wagers that the Fed is nearing the end of its rate hikes as inflation comes down from its peak.

Traders also continued to keep an eye on the latest geopolitical developments.

The International Monetary Fund is exploring a multiyear aid package for Ukraine worth as much as $16 billion to help cover the country’s needs and provide a catalyst for more international funding while Kyiv tries to repel Russian forces, according to people familiar with the matter.


On the currency front, the Bloomberg Dollar Spot Index was little changed, the euro fell 0.2% to $1.0891, the British pound was little changed at $1.2412 and the Japanese yen fell 0.5% to 130.23 per dollar.

🔑 The day’s key events:

Oil prices rose on Thursday as investors become more optimistic about the short-term outlook for the commodity.

West Texas Intermediate rose by 1.32% and stood at $81.21 after fluctuating in a range of just over US$2, in parallel with the general market swings as traders assessed new economic data. On the other hand, Brent for March delivery gained 1.78% to settle at $87.65.


Oil has recovered from a sharp drop earlier in the year, driven by demand from China, the world’s largest crude importer. Traders are beginning to see a pickup in energy demand and Chinese tourism is likely to have a major impact on consumption. The fact that oil is more expensive in the short term indicates that traders see demand outstripping supply.

🍝For the dinner table debate:

Global smartphone shipments suffered their worst quarterly drop on record, a clear sign of cooling consumer demand that portends more headaches for manufacturing poles such as South Korea and Vietnam.

Shipments fell 18.3% in the quarter ended Dec. 2022 compared with a year earlier, to just over 300 million units, according to estimates from Massachusetts-based IDC. Year-to-date, shipments fell 11.3% and marked, the researchers said, the lowest level in a decade.


“We have never seen shipments in a vacation quarter be lower,” Nabila Popal, research director at IDC, wrote in a press release. Along with inflation and economic uncertainties, Covid-19 contagion blockages in China were another factor that hurt the sector, including sales of Apple’s iPhone. “Strong sales and promotions in the quarter contributed to depleting inventories rather than driving shipment growth.”

Leidys Becerra, a content producer at Bloomberg Línea, and Rita Nazareth of Bloomberg News, contributed to this report.