:quality(75)/cloudfront-us-east-1.images.arcpublishing.com/bloomberglinea/K3J2EOUAUBH4LO2CLGLAMVGQDQ.jpg "Positive corporate results boosted investor optimism on Friday.")
A roundup of Friday’s stock market results from across the Americas
🌎 Colombia leads LatAm gains:
Only Peru’s E(SPBLPGPT) stock market closed lower in Latin America on Friday, dropping 0.69%, while Colombia’s Colcap index (COLCAP) bounced back from two sessions of losses and climbed 2.68%, boosted by the shares of Grupo Argos SA (PFGRUPOA), Grupo de Inversiones Suramericana (PFGRUPSU), Ecopetrol (ECOPETL) and Organizacion Terpel (TERPEL).
Unemployment continues to moderate in Colombia, reaching 10% in March, which meant a drop of 2.1 points compared to the same month of 2022, according to the National Administrative Department of Statistics. Experts estimated that national unemployment in the third month of 2023 would be between 10.7% and 11.5% annually.
During the day it was also announced that the Board of Directors of Banco de la República decided to raise its interest rates by 25 basis points to 13.25%. In September 2021, the Colombian central bank began a path of increases that resulted in rate hikes in all the monetary policy meetings held by the board of directors.
The meeting took into account that annual inflation in March remained relatively stable, thanks to the reduction in food inflation, which went from 24.1% to 21.8% between February and March. Services have continued to put upward pressure on inflation, which was reflected in a 47 bp increase in core non-food and non-regulated inflation in March.
🗽On Wall Street:
US equities extended a rally Friday as investors wrestled with strong corporate earnings against concerns about regional banks and inflation. Treasuries rose.
The S&P 500 gained 0.8% after better-than-expected earnings from the likes of Exxon Mobil Corp. and Intel Corp., up 1.3% and 4% respectively. However, the gains proved precarious in midday trading after Federal Reserve officials called for broad changes to bank rules in the wake of Silicon Valley Bank’s collapse.
The Nasdaq 100 (CCMPDL) rose 0.7%, weighed down by Amazon.com Inc.’s 4% loss after a warning over growth in its key cloud computing business. Meanwhile, First Republic Bank fell 43% after reports FDIC receivership is the most likely scenario for the bank after a run on deposits, while Exxon Mobil Corp. (XOM) e Intel Corp. (INTC) saw their shares climb 1.3% and 4% respectively after announcing better than expected Q1 results.
“Earnings relative to expectations appear resilient with a little more than half the S&P 500 reported,” wrote Scott Chronert, managing director at Citi Research. “Full-year numbers and revisions have stabilized of late. The issue remains sentiment and positioning.”
Markets are on edge over the uncertainty of Federal Reserve interest-rate hikes, after fresh inflation data Friday increased the likelihood of an increase next week and possibly in June. Traders have been anticipating the end of rate hikes near term, with cuts before year end.
The personal consumption expenditures price index excluding food and energy, one of the Fed’s preferred inflation gauges, rose 0.3% in March for a second month. Compared with a year ago, the measure was up 4.6%, Commerce Department data showed.
“What looks like sticky contemporaneous inflation remains an issue, preventing the market from getting too carried away on the rate-cutting phase to come in subsequent quarters,” wrote Padhraic Garvey, head of global debt and rates strategy at ING Financial Markets.
The yield on the 10-year Treasury fell nine basis points to 3.44%.
US equities ended the month 1.5% higher, as corporate results have lifted investor sentiment in the face of rate-hike uncertainty and a possible recession. In the latest batch of earnings, Charter Communications Inc. gained 7.6% after reporting results while Snap Inc. plunged 17% after missing revenue estimates.
“April largely is a good month. Again, it’s probably earnings-season driven, but we’ve been getting some economic reports that are also saying that the economy, and especially inflation, is likely going in the right direction — just not maybe fast enough,” said Kim Forrest, chief investment officer at Bokeh Capital Partners. “Businesses and people are spending, inflation is still there, but the data says it’s slowly ramping down.”
In Europe, the Stoxx 600 gained 0.6%, even as an uptick in consumer-price gains pointed to more rate increases by the European Central Bank.
The Bank of Japan, in contrast, renewed its commitment to stimulus after its first meeting under Kazuo Ueda. It left its short-term policy rate at minus 0.1% and maintained its 0.5% ceiling for 10-year bond yields.
Elsewhere, oil prices gained, gold was little changed, and the dollar was modestly stronger against major peers.
The Bloomberg Dollar Spot Index rose 0.1%, the euro was little changed at $1.1019, the British pound rose 0.6% to $1.2567 and the Japanese yen fell 1.7% to 136.24 per dollar.
🍝 For the dinner table debate:
Brazil and Mexico surprised investors with stronger-than-expected growth in data released Friday, indicating Latin America’s biggest economies are holding up amid high interest rates and persistent inflation.
Brazil’s economic activity grew 3.3% month-on-month in February, according to a central bank gauge, roughly triple the 1.05% increase forecast by analysts in a Bloomberg survey. Mexico’s economy, meanwhile, grew 1.1% in the first quarter from the previous three months, above the survey’s median forecast of 0.8%, preliminary data showed.
The growth figures took investors by surprise, as both countries’ central banks maintain a tight monetary policy to quell above-target inflation. Brazil’s new government, headed by Luiz Inácio Lula da Silva, is working to revive credit flows, while Mexico has received a boost from continued U.S. demand. Taken together, the reports will give some respite to analysts who have warned that economic contractions are on the horizon.
