A roundup of Tuesday’s stock market results from across the Americas
👑 Mexico heads the gains in LatAm:
Mexico’s S&P BMV/IPC (MEXBOL) led the gains in Latin America on Tuesday, climbing 0.64%, with the shares of Promotora y Operadora de Infraestructura (PINFRA*), Grupo Elektra (ELEKTRA*) and Industrias Peñoles (PENOLES) posting the highest gains.
State-owned electric power utility Comisión Federal de Electricidad (CFE) announced Tuesday that it will buy the majority of the electricity generation business from Spanish company Iberdrola, as announced by President Andrés Manuel López Obrador.
“This means the rescue of the CFE and is a new nationalization of the electricity industry,” the Mexican president commented in a video broadcast from his Twitter account. AMLO said that the purchase will allow CFE to increase its electricity generation capacity from the current 39.6% to 55.5%, mainly in the northeastern region of the country.
Minutes earlier Iberdrola announced the sale of almost 80% of its assets in the country for $6 billion through Mexico Infraestructure Partners (MIP) and Fonadin, which will hold the majority of the capital.
📉 A bad day for Chile’s IPSA:
Chile’s IPSA (IPSA) posted the sharpest losses of the region, falling 1.53%, with the shares of CAP SA (CAP), Ripley (RIPLEY) and Sociedad de Inversiones Oro Blanco (OROB) pushing the index lower.
The Chilean economy contracted by 0.5% in February 2023 compared to the same month last year. The record came after a surprising growth in January, which had injected optimism in the market and revived hopes of avoiding a recession for this year. The data, released on Monday by the central bank, exceeded market consensus expectations.
🗽On Wall Street:
The stock market snapped a four-day rally amid a selloff in banks. Treasuries climbed as softer data on job openings bolstered bets the Federal Reserve is about to wrap up its tightening campaign.
A gauge of financial heavyweights like Wells Fargo & Co. and Citigroup Inc. sank 2%. First Republic Bank and Zions Bancorporation drove regional lenders down, slumping at least 4.8%. In his wide-ranging annual letter to shareholders, JPMorgan Chase & Co.’s chief Jamie Dimon warned the US banking crisis that sent markets careening last month will be felt for years.
The S&P 500 slipped 0.58%, the Nasdaq Composite (CCMPDL) 0.52% and the Dow Jones Industrial Average 0.59%.
“Investors should continue to be vigilant for signs of bank stress, and we expect market participants to react disproportionately to negative economic news,” said Gennadiy Goldberg, senior US rates strategist at TD Securities.
Two-year yields slumped 14 basis points to around 3.8%. Swap contracts referencing Fed meeting dates downgraded the odds of a quarter-point rate hike in May to just under 50%, from about 60%. The dollar fell.
Vacancies at US employers dropped to the lowest since May 2021, the Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS, showed.
“It was just a matter of when, not if, we were going to see evidence of lessened job demand,” said Peter Boockvar, author of the Boock Report. “And at some point, the pace of firings will pick up as companies try to defend profit margins and respond to the slowing economic backdrop. I just don’t see the Fed hiking rates in May or any time thereafter in this cycle.”
The JOLTS data precede Friday’s jobs report, which is currently forecast to show employers added nearly a quarter of a million workers in March. Economists are expecting the unemployment rate to hold at a historically low 3.6% and for average hourly earnings to rise firmly.
Headwinds from the recent bank turbulence, an oil shock and slowing growth are poised to send stocks back toward their 2022 lows, according to JPMorgan strategist Marko Kolanovic. In his view, the inflows into stocks over the past few weeks “make little sense” and were largely driven by systematic investors, a short squeeze and a decline in the Cboe Volatility Index, or VIX.
Bank of America Corp. clients sold US equities last week for the first time in five weeks, withdrawing the largest amount of funds from the asset class since October, according to strategists led by Jill Carey Hall.
The Bloomberg Dollar Spot Index fell 0.2%, the euro rose 0.5% to $1.0956, the British pound rose 0.7% to $1.2499 and the Japanese yen rose 0.6% to 131.66 per dollar.
🍝 For the dinner table debate:
Former US president Donald Trump on Tuesday pleaded not guilty to 34 formal charges filed against him at a Manhattan courthouse.
The move comes five days after he became the first former U.S. president to be indicted by a New York State grand jury on March 30. The indictment is related to Manhattan District Attorney Alvin Bragg’s investigation into hush money payments made just before the 2016 election to cover up an alleged decade-long infidelity.
Trump must now deal with the criminal case even as he pursues the Republican nomination in the 2024 race and faces a separate investigation into his attempt to overturn the 2020 election result in Georgia, as well as a federal special counsel investigation into those efforts and his handling of government documents.
Leidys Becerra, a content producer at Bloomberg Línea, and Rita Nazareth of Bloomberg News, contributed to this report.