Concerns Over Economic Growth Weigh on U.S., LatAm Markets

The OECD has revealed its growth forecasts for 2022, identifying Argentina, Colombia and Costa Rica as likely to see above average growth this year

The OECD headquarters in Paris. Photographer: Getty Images/AFP
June 08, 2022 | 05:20 PM

A roundup of Wednesday’s stock market results from across the region

🗽 On Wall Street:

Concerns of lower economic growth and longer lasting inflation affected the performance of the U.S. stock markets, which ended Wednesday’s session with losses.

The S&P 500 dropped 1.08%, while the Dow Jones Industrials fell 0.81% and the Nasdaq Composite (CCMPDL) declined 0.73%.

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Investor sentiment remains fragile due to doubts over whether rising interest rates will ultimately dampen economic growth and corporate earnings.

Adding to inflation concerns were rising oil prices, which traded back above $120 a barrel after gasoline stocks and crude inventories fell at the largest storage hub in the U.S.

Losses deepened after the head of the Securities and Exchange Commission anticipated revisions to market rules, Bloomberg reported.

🔑 The Day’s Key Movements:

The Organisation for Economic Cooperation and Development (OECD) revealed its growth forecasts for 2022 and the report, released Wednesday in Paris, is both positive and negative. On the one hand, the OECD calculated that there are three Latin American countries that will perform better than the average of the nations analyzed, but on the other hand, it lowered its global growth forecasts.

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The three Latin American economies that will stand out above average this year are Argentina, Colombia and Costa Rica. Colombia will record the second best performance among the countries analyzed, with projected growth of 6.1%, and which is second only behind India in 2022.

Despite the good winds that will blow in these three countries, the OECD also forecasts that this year the world will record a growth of 3%, in contrast to the 4.5% predicted in December, while in 2023 the expansion would be even lower.

The OECD, which groups together 38 countries, also warned that the Russian invasion of Ukraine unleashed a wave of high prices in raw materials that will cause inflation in the member countries of the organization to remain close to 9%.

📉 A Bad Day:

Concerns about world economic growth, which fueled risk aversion, dragged down Latin America’s stock markets, which closed the day with losses, with the exception of the Peruvian market, which closed practically stable.

The main Colombian stock market index, COLCAP, has still not recovered and completed three consecutive sessions of declines on Wednesday.

The performance of the Grupo Sura (GRUPOSUR) share continues to weigh on the index, which on Tuesday had fallen more than 20%, and today added a drop of 15%.

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The company’s share price has been correcting after weeks of rises, to the point that it reached an all-time high last Friday, amid the Gilinski Group’s bid to win a new seat on the company’s board of directors.

Losses were also seen in Brazil’s Ibovespa (IBOV), which followed external market concerns with rising inflation in the world and a slowdown in major economies.

On the domestic scene, President Jair Bolsonaro’s government’s attempts to reduce fuel prices also weighed on investor sentiment.

The Mexican stock market did not escape losses and the performance of the materials, communication services and financial sectors dragged down the S&P BMV/IPC (MEXBOL).

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🍝 For the Dinner Table Debate:

Uber Eats pulled out of Brazil because it couldn’t beat Latin American rivals iFood and Rappi, Uber’s (UBER) CEO Dara Khosrowshahi said in an exclusive interview with Bloomberg Línea on Wednesday.

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“We saw that we couldn’t be the biggest player in Brazil. So, if we couldn’t be number one, we decided to leave and focus on other markets,” Khosrowshahi said on the sidelines of the Bloomberg Tech Summit held in San Francisco.

Khosrowshahi said that Uber sees no sign of recession in Brazil, and affirmed that the company has benefited from the return of mobility following the lockdowns of the Covid-19 pandemic.