Inflation Spike Punctures U.S. Markets; Mexico Leads LatAm Losses

West Texas Intermediate dropped 0.81% during a volatile session on Friday

Inflation hit a 40-year high in May as consumer prices accelerated to 8.6% in a year-on-year comparison. Photo: Bloomberg
June 10, 2022 | 05:45 PM

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

🗽 On Wall Street:

An unexpectedly high inflation reading in the United States dragged down stock markets in the world’s largest economy on Friday, and which suffered their sharpest drop in three weeks. The data suggest that the Federal Reserve will have to be more aggressive in its monetary tightening cycle.

Inflation hit a 40-year high in May as consumer prices accelerated to 8.6% in a year-on-year comparison, according to the Department of Labor, and which is probably still not its peak level. A separate report showed U.S. consumer confidence fell in early June to a record low, adding pressure on airline, casino and hotel stocks.


The S&P 500 plunged 2.91%, its ninth weekly decline, closing out the second-worst week this year. Technology stocks fared the worst, with the Nasdaq Composite (CCMPDL) plunging 3.52%, while the Dow Jones fell by 2.73%.

In the Treasury bond market, two-year yields exceeded 3%, a level not seen since 2008. While in the cryptocurrency sector, Bitcoin fell back below $30,000.

“This was a very bad inflation report for both the White House and the Fed. The White House will be watching how the Democrats do in next week’s primaries. The Fed’s latest mistake is that it failed to act forcefully to cool inflation, and now it will be forced to make more rate hikes, as it is clear that inflation is not transitory and is not ready to peak,” said Edward Moya, an analyst at Oanda.

🔑 The Day’s Key Movements:

Oil posted its seventh weekly gain as tight fuel supply balances underpinned rallies, although headwinds from accelerating U.S. inflation limited a daily advance in crude.


West Texas Intermediate fell 0.81% during a volatile session on Friday to close at $120.53 a barrel in New York.

Despite the drop, WTI ended the week up 1.5%. “We’re looking at inflation that’s really off the charts,” said Tariq Zahir, a manager of the global macro program at Tyche Capital Advisors LLC. “Crude is going to be at the mercy of the markets,” he added.

🥇 Latin America’s Leader:

Chile’s Ipsa (IPSA) was the best performer on Friday in Latin America, with the Chilean stock index closing up 1.05% driven by the raw materials, energy and consumer staples sectors.

Shares of Empresa CMPC SA (CMPC), Sociedad Química y Minera de Chile SA (SQM/B) and SMU SA (SMU) were the best performers.

Colombia’s Colcap (COLCAP) and Argentina’s Merval (MERVAL) also shrugged off the losses in the United States. The main stock market index of the Colombian bourse closed the day with a gain of 0.26%, driven by the raw materials, public services and basic consumer goods sectors, while the Argentine index rose 0.31%.

📉 A Bad Day:

The Mexican stock exchange S&P BMV/IPC (MEXBOL) recorded Latin America’s sharpest losses on Friday, closing the day with a drop of 1.66%. The index was dragged down by the performance of the communication services, real estate and consumer staples sectors.


Brazil’s Ibovespa (IBOV) dropped 1.51%, negatively influenced by the raw materials, basic consumer goods and communication services sectors.

🍝 For the Dinner Table Debate:

Do you dream of moving to another country? A study by ECA International has produced a ranking of the most expensive and the cheapest cities in the world to live in this year as an expatriate, taking into account the cost of living.

In Latin America and the Caribbean, Buenos Aires, Montevideo and Panama City are the three most expensive cities in the region to live as a foreigner. The three cheapest, in contrast, are Medellín, Santa Cruz (Bolivia) and Paraguayan capital Asunción.

The research, which was conducted in March of this year, analyzes the annual cost of consumer goods and services. It also compares the costs of renting in areas commonly inhabited by expatriates in more than 410 cities around the world. The most recent report ranked a total of 207 cities in 120 countries.