A roundup of Thursday’s stock market results from across the Americas
👑 Colombia’s Colcap leads in Latin America:
Latin American stock markets followed the strong performance of the NYSE on Thursday, all closing higher except for Chile’s IPSA index.
Colombia’s Colcap index (COLCAP) led the gains of the session, gaining 2.39%, driven by the good performance of the public services, materials and basic consumer goods sectors.
As expected by the market, the board of directors of Colombia’s Banco de la República raised interest rates by 25 basis points, taking it to 13%. Although the reference rates continue to rise, the magnitude of the increase is beginning to lose pace compared to the increases that have occurred in previous months, which have been between 100 and 75 basis points.
“If the month of March begins to see a reduction in the inflation rate, it is possible that we have already reached the ceiling in terms of interest rates, but we will have to see it with the new data. But I am optimistic in terms of of inflation and I hope this is correct”, Finance Minister José Antonio Ocampo said.
📉 A bad day for Chile’s IPSA:
Chile (IPSA) was the only index in the region to close lower, dropping 0.09% and dragged by the poor performance of the raw materials, real estate and industrial sectors.
Unemployment in Chile rose to 8.4% in the December 2022-February 2023 period, exceeding market expectations, with a Bloomberg survey having pointed to an increase of 8.1%.
This is the fourth consecutive annual increase after months of falls and also the highest level since September 2021. According to the National Institute of Statistics, the figure represented an increase of 0.9 percentage points in twelve months due to the fact that the “rise in the labor force (4.0%) was greater than that presented by employed persons (3.0%)”.
🗽On Wall Street:
Technology stocks propelled US stocks higher as Federal Reserve officials reiterated their resolve to lower inflation.
The S&P 500 gained 0.6% — even with financials under pressure — while the tech-heavy Nasdaq 100 (CCMPDL) rose 0.9%, pushing further into a bull market, and the Dow Jones Industrial Average gained 0.43%.
Treasuries were little changed and the dollar was weaker against major peers.
The gains come as market watchers digested a round of Fed commentary suggesting more monetary tightening was necessary, even after the collapse of three US banks earlier this month. Boston Fed President Susan Collins said tightening was needed. Richmond Fed President Thomas Barkin said the Fed can raise rates more if inflation risks persist. And Minneapolis Fed President Neel Kashkari said he’s committed to getting inflation back to 2% and that it’s not yet fully clear what impact the financial-system turmoil will have.
“With cracks in the banking system becoming apparent, the Fed’s job has become even harder,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors. “Recession risk remains in focus given the Fed’s historical track record of struggling to tighten policy while easing the economy to a soft landing.”
President Joe Biden’s administration also called on regulators Thursday to tighten the rules for mid-sized banks in response to the recent bank failures. Stress in the financial sector has increased the chance of the Fed tipping the economy into a recession with its rate hikes. However, Collins echoed remarks by Fed Chair Jerome Powell last week that pain in the banking sector may be worth 25 basis points of tightening. Tighter credit conditions could remove the need for more hikes later, she said. Analysts have agreed, saying it could be the equivalent of a far more aggressive hike.
“The plausible range is anything from nearly zero to 200bp or more in the event that stress were to broaden and deepen,” Krishna Guha, Evercore ISI head of central bank strategy, wrote. “We will all need to update as the data comes in and that updating could be quite rapid.”
Investors expect US rates to sit around 4.3% by the end of the year, around 70 basis points lower than the current level. However, several strategists have said markets are wrong to expect rate cuts this year. The labor market remains robust, though US unemployment claims ticked up for the first time in three weeks. And high inflation — as measured by the so-called PCE Core Deflator due Friday — is expected to have persisted last month.
Elsewhere in markets, oil rebounded, gold gained and Bitcoin traded around $28,000.
The Bloomberg Dollar Spot Index fell 0.4%, the euro rose 0.6% to $1.0907, the British pound rose 0.6% to $1.2391 and the Japanese yen rose 0.2% to 132.65 per dollar.
🍝 For the dinner table debate:
Doing or closing a business in any of the main cities of Latin America implies several pleasures: the satisfaction of starting or reaching a magnificent agreement and the possibility of experiencing some of the best cuisine in the world in our own backyard. Latin America is one of the most renowned regions for its cuisine and its places to eat, from the informal to those that enter the ranks of ‘haute cuisine’, as reflected in the rankings of the best restaurants in the world - this year there are 10 Latin American exponents among the “50 Best Restaurants in the World”.
The many dining options in a region with dozens of thriving cities and countless businessmen or entrepreneurs looking to start a business or close a deal make it difficult to choose the best place. Given this, Bloomberg Línea set itself the challenge of proposing a list of the best restaurants to do business in Latin America. According to the editorial committee of Bloomberg Línea, the list was made after consulting with gourmands, ciceros and sommeliers on what points should be taken into account by those who want to carry out a business lunch in the financial and economic capitals of Latin America.
Leidys Becerra, a content producer at Bloomberg Línea, and Isabelle Lee and Carly Wanna of Bloomberg News, contributed to this report.