Chile’s IPSA Continues Upward Trend; NYSE Closes Higher Amid Election Expectation

Peru’s stock exchange was the only one in Latin America to close lower on Tuesday, while US stocks climbed

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, US.
By Bloomberg Línea and Bloomberg News
November 08, 2022 | 11:12 PM

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

👑 Chile out in front again in Latin America:

Most Latin American stock indexes closed higher, with the strongest gains for Chile’s IPSA (IPSA) and Brazil’s Ibovespa (IBOV).

Chile’s benchmark stock index posted a 2.20% increase, driven by the performance of the materials, industrial and energy sectors. The Chilean stock index was driven by gains for Sociedad Química y Minera de Chile (SQM), up 5,95%, Compañía Sudamericana de Vapores (VAPORES), which rose 5.34%, and Empresas CMCP (CMPC), which closed 4.53% higher.

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Inflation in Chile continues to moderate. The Consumer Price Index for October registered a monthly variation of 0.5% and a year-on-year variation of 12.8% in October, according to the National Statistics Institute (INE).

The figure generated a pleasant surprise in Chile, as such a strong deceleration was not expected for the tenth month of the year, but rather for November. In this case, there was an incidence of items that showed setbacks in relation to September and allowed the rise in the Consumer Price Index (CPI) to be tempered.

In Brazil, the stock market benchmark registered an increase of 0.71%, driven by the materials, energy and consumer goods sector. On a disaggregated basis, the boost came from CSN Mineracao (CMIN3), whose shares climbed 9,84%, Cia Siderúrgica Nacional (CSNA3), which closed 3.35% higher, and Metalurgica Gerdau (GOAU4), which gained 3.2%.

Investors remain attentive to the transition of the federal government after Lula da Silva’s victory. Today, vice-president-elect Geraldo Alckmin announced Simone Tebet in the social development area on Tuesday.

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In the economic area, the vice president confirmed that the group will be led by four economists: André Lara Resende, Persio Arida and Guilherme Mello. Former Finance Minister Nelson Barbosa has also joined the group. Alckmin also stated that former Finance Minister Guido Mantega will participate in the transition.

📉 A bad day for Peru’s markets:

The region’s losers were limited to Peru’s S&P/BVL (SPBLPGPT), which closed 0.31% lower. The decline was due to the drag from the industrial and consumer staples sectors. Losses were led by Compañía Siderúrgica de Perú (SIDERC1), which closed 8.64% lower, Grana y Motero, which sank 8.54%, and Intercop Financial, whose shares dropped 2.59%.

The bad news came from Beat, which will not only stop operating in Argentina, Peru and Mexico from November 9, but will also stop investing in Latin America.

Sources close to the company told Bloomberg Línea that the closure of the business was a decision of FREE NOW, owner of the platform, and that it is related to the international situation. The company had accumulated close to 10 years of operations in Mexico, Colombia, Argentina, Peru and Chile.

🗽 On Wall Street:

US stocks rose for a third day as investors awaited midterm election results and monitored the selloff in crypto tokens that wiped out more than 10% from the price of Bitcoin. The dollar fell with Treasury yields.

The S&P 500 closed higher, after earlier wiping out gains that had topped 1%. Sentiment was dented after Bitcoin plunged as the owner of the largest crypto exchange swooped in to buy a smaller rival that ran into liquidity trouble. The yield on two-year Treasuries, more sensitive to Federal Reserve policy changes, shed 6 basis points, while a gauge of the dollar dropped for a third day.

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Thel S&P 500 gained 0.56%, the Nasdaq Composite (CCMPDL) 0.49% and the Dow Jones Industrial Average 0.49%

In postmarket trading, shares in Walt Disney Co. declined after the company reported sales and profit that fell below Wall Street expectations.

Equities gained in the regular session as investors eyed potential gridlock from midterm results. Still, any final outcome may not be known for days or even weeks if races are as close as polls suggest and if losers challenge results.

In an unexpected development, billionaire Changpeng “CZ” Zhao consolidated his position atop the crypto world on Tuesday with a move to take over FTX.com. Terms of the emergency buyout were scant, helping to send prices of cryptocurrencies tumbling after a brief rebound.

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“The mini crash in Bitcoin/crypto did destabilize the stock market and cause a sharp drop,” Jay Hatfield of Infrastructure Capital said. “Investors don’t like to see any disruptions or mini crashes in any risk asset.

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A history of robust performance following midterm results has helped buoy optimism about the outlook for equity markets. While polls suggest Republicans could make gains, thereby placing a check on Democratic policies, there are multiple scenarios. The best outcome for Treasuries could be a Republican control of both the House of Representatives and Senate, while the dollar could find support should Democrats keep both chambers.

For many the biggest headwind for markets is the Fed’s monetary tightening with Thursday’s consumer-price-index data the next event risk coming on the heels of core consumer prices rising more than forecast to a 40-year high in September. Even if prices begin to moderate, the CPI is far above the Fed’s comfort zone.

Going forward there may be a silver lining in gridlock for policy makers, according to Art Hogan, chief market strategist at B. Riley Wealth.

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“Divided government, particularly leading into a presidential election, will most likely create a standstill where very little gets done,” Hogan wrote. “That’s probably a good thing for the Fed because various stimuli have not made their work easier.”

Treasuries gained across the board Tuesday, with the benchmark 10-year rate dropping as much as 9 basis points. Meanwhile, traders shaved bets on rate hikes, with swap markets still leaning toward a 50 basis-point Fed hike in December. More notable moves were further out, with the peak reaching just above 5% in the first half of 2023.

Nvidia Corp. climbed as it began producing a processor for China. Take-Two Interactive Software Inc. fell after reducing its forecast for net bookings.

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Europe’s Stoxx 600 rallied, after a weak open. Chinese equities halted a rally as traders considered a jump in virus infections and official comments defending Covid Zero. Oil fell as China’s renewed commitment to strict Covid-19 policies overshadowed a global market backdrop of shrinking fuel inventories.

On the currency markets, the Bloomberg Dollar Spot Index fell 0.4%, the euro rose 0.5% to $1.0071, the British pound rose 0.2% to $1.1536 and the Japanese yen rose 0.7% to 145.63 per dollar.

🔑 The day’s key events:

Cryptocurrencies fell further on Tuesday. The purchase of the FTX exchange by its rival Binance, renews doubts among digital currency enthusiasts about the possibility that problems are brewing in the industry and among its main players.

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The market was surprised that the sale was made because of liquidity problems, according to Binance CEO Changpeng Zhao. But the market pointed out that part of the announcement made by the executive was one of the reasons for the fall due to the fact that the letter of intent was non-binding.

The terms of the acquisition were very few. What is known is that the letter of intent to acquire by Binance Holdings came after a two-man dispute, with Zhao actively undermining confidence in FXT’s financials and helping to spark an exodus of FXT.com exchange users.

In the Nov. 8 session, bitcoin, the cryptocurrency with the highest market capitalization value, fell as low as $17,603.54 per unit, the lowest levels seen in November 2020. The fall of the digital currency weighed on the performance of virtually all digital assets.

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“It definitely has to do with a new crisis created by FTX, another solvency crisis,” mentioned head of data and analytics at FRNT Financial, Strahinja Savic.

🍝 For the dinner table debate:

After his buyout of Twitter (TWTR), Elon Musk’s wealth has lost more than half its value since its peak last year.

The entrepreneur’s net worth has seen a loss of $92 billion this year, the sharpest drop on the Bloomberg Billionaires Index. While he continues to hold the position of the world’s richest person, his fortune currently stands at $177 billion; while last year it totaled $340 billion when Tesla’s share price (TSLA) reached a record $410 per share.

On the one hand, Tesla’s CEO completed the purchase of the most controversial social network in the market, Twitter, on October 27. His arrival set a trend by firing about half of the San Francisco-based company’s employees. But on the other hand, Tesla is struggling with economic pressures such as the recent closure of its Beijing showroom and lowering prices in China.

Estephanie Suárez, a content producer at Bloomberg Línea, and Stephen Kirkland and Emily Graffeo of Bloomberg News, contributed to this report.