A roundup of Tuesday’s stock market results from across the Americas
🗽 On Wall Street:
US stocks advanced on Tuesday as investors mulled whether the latest data showing prices rose less than forecast last month would prompt the Federal Reserve to alter its aggressive approach to battling inflation.
The S&P 500 and the Nasdaq 100 capped a volatile session with a gain after data indicated the worst of inflation has likely passed. Fed Chair Jerome Powell’s closely watched measure of services prices that excludes energy and rents also continued to moderate.
The Nasdaq Composite (CCMPDL) gained 1.01%, the S&P 500 0.73% and the Dow Jones Industrial Average 0.30%.
The soft consumer price index data was briefly celebrated with a surge in equities, but the indexes pared those gains as investors turned their focus to what the latest numbers mean for the Fed’s path of rates.
While the Fed is largely expected to raise rates by half a percentage point Wednesday, investors will be watching what officials say for further policy clues. Swap markets are now favoring a quarter-point hike as early as the Fed’s February meeting.
Still, some investors are cautious about overstating the latest CPI print.
“Investors aren’t seeing the handwriting on the wall that the Fed is going to stay higher for longer,” said Jason Katz, managing director and private wealth adviser at UBS on Bloomberg Television. “If they cut rates in the latter part of next year, that’s going to be because they broke things along the way and things are ugly. So it’s our view that the terminal rate lands anywhere between 5%-5.25% and remains there for the full calendar year.”
Meanwhile, Treasuries surged, with the policy-sensitive two-year yield dropping as much as 24 basis points. The greenback halted a two-day rally.
Following the Fed, the European Central Bank will announce its rate decision Thursday. Markets will also contend with decisions from the Bank of England and monetary authorities in Mexico, Norway, the Philippines, Switzerland and Taiwan.
On the currency markets, the Bloomberg Dollar Spot Index fell 0.9%, the euro rose 0.9% to $1.0629, the British pound rose 0.7% to $1.2360 and the Japanese yen rose 1.5% to 135.62 per dollar.
🔑 The day’s key events:
Inflation data also had an impact on the international oil market, as traders expect the US economic landing to be softer. In addition, news from China also improved the outlook for crude oil demand.
For these reasons, WTI crude oil for delivery in January advanced $2.22 and settled at a price of $75.39 per barrel, an increase of 3.03%, while Brent oil for February settlement gained another $2.25 to $80.42 per barrel, an increase of 3.12%.
On Tuesday, China’s ambassador to the US, Qin Gang, said the country will continue to relax its restrictions against Covid-19 and will soon welcome more international travelers, raising demand prospects in the world’s top oil importer.
The market still expects TC Energy Corp. to be able to partially restart the Keystone pipeline, which could happen on Dec. 14. The pipeline carries 600,000 barrels per day.
👑 Colombia’s Colcap leads in Latin America:
Stock markets in Latin America have not yet caught the contagion of the good results on Wall Street. On Tuesday, only Colombia’s Colcap (COLCAP) registered gains, although they were brief, to the order of 0.08%.
On Tuesday, Colombian energy and finance stocks performed well, but communications services stocks detracted from overall gains. Shares of Empresa de Telecomunicaciones de Bogotá (ETB) dove 6.67%.
On the Colombian market, private pension funds continue to be the second largest players in Colombian public debt bonds as of November. However, they disposed of 1.57 trillion pesos of bonds between October and November, according to data from Crédito Público.
For experts, the pension reform envisaged by President Gustavo Petro’s government is not the main reason for that, however
📉 A bad day for Brazil’s Ibovespa:
Meanwhile, Brazil’s Ibovespa (IBOV) extended its losses and fell 1.71% on Tuesday, in the face of an underperformance of financial and real estate stocks. Shares of Suzano S.A. (SUZB3) and Banco do Brasil S.A. (BBAS3) fell 6.43% and 5.71%, respectively.
Brazil’s president-elect, Luiz Inácio Lula da Silva, confirmed on Tuesday that former minister of civil affairs, Aloizio Mercadante, will be the president of the country’s development bank (BNDES) in his government.
“We need someone who thinks about development, who thinks about reindustrializing this country”, were Lula’s words.
Argentina’s Merval (MERVAL), S&P/BVL Peru (SPBLPGPT) and Chile’s Ipsa (IPSA) each fell 0.58%.
In Peru, the market continues to be affected by the political crisis and citizen protests in different regions of the country.
Minister of Economy and Finance Alex Contreras said on Tuesday that the estimated economic impact of the protests is 60 to 100 million soles per day, an amount equivalent to around $26 million.
Mexico’s S&P/BMV IPC (MEXBOL) lost 0.26%.
🍝 For the dinner table debate:
The value of global trade will record a new all-time high in 2022, with an increase of nearly 12% to $32 trillion, according to a United Nations UN report that indicates a slowdown heading into next year.
“The considerable progress in trade during 2022 was largely due to the increase in the value of the energy goods business,” the UN Conference on Trade and Development (UNCTAD) said in its report released Tuesday.
As for merchandise trade, it amounted to $25 trillion, an increase of almost 10% over 2021. According to the document, the services sector increased by 15% year-on-year to nearly $7 trillion.
Still, weaker economic growth and inflation are likely to hamper international trade in the coming year.
“While the outlook for world trade remains uncertain, negative factors appear to outweigh positive trends,” UNCTAD said.
Sebastián Osorio Idárraga, a content producer at Bloomberg Línea, and Isabelle Lee of Bloomberg News, contributed to this report.