A roundup of Tuesday’s stock market results from across the region
👑 Colombia’s Colcap recovers:
Latin American markets have not been oblivious to the international mood and although Tuesday’s performance was mixed, it was not a day of big gains. However, Colombia’s Colcap (COLCAP) had the strongest climb in the region and rebounded after Monday’s drop to levels not seen since June 2020.
The recovery of the Colombian stock exchange’s main stock index was in line with gains in Ecopetrol (ECOPETL) shares, the company’s largest trader.
The company’s stock rose in tandem with the increase in oil prices.
Mexico’s stock market also advanced thanks to the performance of the industrial, consumer staples and consumer discretionary sectors.
Grupo Gruma shares were among those that led the rebound in the S&P/BMV IPC (MEXBOL) after the previous session closed at its lowest level in 16 months with the announcement by President Andrés Manuel López Obrador that the company would not raise prices following the extension of the government’s anti-inflation plan.
📉 A bad day for Argentina’s Merval:
The climate of uncertainty pushed Merval index (MERVAL) to the sharpest loss in the region, falling almost 2%, tumbled by the poorly performing shares pf Sociedad Comercial del Plata (COME), Grupo Financiero Galicia (GGAL) and Banco Macro (BMA).
“It’s important to remember that Argentine stocks are coming from a bullish rally, which could indicate that not only the turbulence in the US market is causing the fall, but it could also be a market rest after so much increase,” said Javier Rava, director of Rava Bursátil.
Brazil’s Ibovespa (IBOV) extended Monday’s losses, falling in line with the international downward trend.
Brazilian investors were disconcerted by the minutes of the central bank’s monetary policy committee meeting, which, while signaling a pause in the monetary tightening cycle, warned that there will be no hesitation in resuming the hiking cycle if inflation does not continue along the expected path.
🗽 On Wall Street:.
US stocks ended a volatile session lower after a slew of Federal Reserve officials hammered home their resolve to remain aggressive in their fight against inflation.
The S&P 500 dropped for the sixth straight session, its longest losing streak since February 2020, sparked by harsh central bank tightening programs. The index swung between gains and losses throughout the session after the Federal Reserve’s James Bullard added to a chorus of officials saying more rate hikes are needed and the risks to the economy remain elevated.
The S&P 500 closed 0.21%, while the Dow Jones Industrial Average dropped 0.43%, while the Nasdaq Composite (CCMPDL) gained toward the end of the day’s trading to close 0.25% higher.
Longer-dated Treasuries swung to a loss, erasing an earlier rebound. The Bloomberg Dollar Spot Index set a fresh record high as investors sought haven assets.
Risk assets have been in a tailspin since the Fed delivered a third jumbo hike and warned of more pain to come. An escalation of Russia’s energy conflict with Europe after three pipelines were wrecked in suspected sabotage pushed European natural gas prices higher, further bruising sentiment during the session.
Investors also digested a flurry of data on Tuesday, including core capital goods orders and consumer sentiment, that paint a picture of an economy that can likely withstand additional harsh central bank tightening.
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“It is an unsettled market,” said Louise Goudy, partner at Crewe Advisors. “People aren’t sure what the direction and the terminal rate will be, and that’s until we get a better sense of where we’re really going. But the Fed knows that inflation is a genie that’s hard to get back in the bottle and they want to make sure that they take care of the problem at hand.”
Markets have been dealing with “one rolling shock after another,” and haven’t been able to fully recover, Jack Janasiewicz, portfolio manager with Natixis Investment Managers Solutions, said in an interview at Bloomberg’s New York headquarters.
“I think what’s driving the markets is they just aren’t comfortable with what’s the terminal rate that the Fed needs to get to -- is it here, is it much higher, is it close?,” he said “That uncertainty creates interest-rate volatility and I think that’s what the market’s having a tough time digesting.”
Higher interest rates and the dollar are driving a lot of the recent selling, Shawn Cruz, head trading strategist at TD Ameritrade, said in an interview.
“Right now there’s a lot of variables up in the air and we’re not going back and forth between optimism and pessimism -- there’s a legitimate repricing and re-evaluation going on at the moment, so it makes sense that you probably aren’t going to see technical levels hold, per se,” he said.
But every tumultuous market day is a step closer to recovery, according to Julie Biel, portfolio manager for Kayne Anderson Rudnick.
“I think there’s more realism, there’s more understanding that a soft landing is just impossible to really navigate when you’ve let out this much fiscal and monetary policy,” she said. “It’s just not possible to engineer this with inflation this high. And so that realism is a positive thing. The thing is that we still kind of have a long way to go in terms of a possible correction.”
UK markets also remained in turmoil days after the new prime minister unveiled sweeping tax cuts that threaten to add to inflationary pressures. The 30-year UK government bond yield topped 5% for the first time in two decades and the pound held near $1.07.
On the currency markets, the Bloomberg Dollar Spot Index was little changed, the euro fell 0.2% to $0.9592, the British pound rose 0.3% to $1.0718, and the Japanese yen was little changed at 144.83 per dollar.
🔑 The day’s key events:
Oil prices rebounded after hitting near nine-month lows on Monday, hit by a strong dollar and uncertainty that central bank policy will lead to a global recession.
The market rally received a boost after reports that Russia may push for new OPEC+ production cuts, according to a Reuters report.
The decision, if finalized, could increase supply concerns as the start of sanctions to be imposed by the European Union on Russian oil approaches.
“OPEC+ will keep this oil market tight and the production cut is easily justified given the weakness in Europe and Asia,” according to Edward Moya, an analyst at Oanda.
Investors are also on the lookout for possible disruptions in the Gulf of Mexico due to the arrival of Hurricane Ian.
🍝 For the dinner table debate:
The first public auction of an asset seized after the Russian invasion of Ukraine fetched around $38 million. A luxury yacht, once owned by billionaire Dmitry Pumpyansky, sold for about half its reported value and fetched $75 million.
The yacht, named Axioma, has five decks, is 72 meters in length, has an infinity pool and a 3D cinema. It was seized in March in Gibraltar by the British territory’s authorities at the entrance to the Mediterranean Sea.
Last month, JPMorgan obtained a court order in Gibraltar allowing the sale of the ship after Pumpyansky defaulted on a loan linked to the vessel, Bloomberg previously reported.
The firm’s lawyers in Gibraltar said in a statement on its website that the bank “will ultimately recover all amounts owed to it.”
Pumpyansky was sanctioned by the European Union on March 10 and five days later by the United Kingdom.
-- Carlos Rodríguez Salcedo, a content producer at Bloomberg Línea, and Isabelle Lee, Vildana Hajric and Peyton Forte of Bloomberg News, contributed to this report.