LatAm Markets Close Mixed; NYSE Ends Week With Strong Gains

Colombia’s Colcap led the gains in Latin America, while the strong performance of tech shares pushed the NYSE to a positive close for the week

Traders on the floor of the New York Stock Exchange (NYSE) in New York, US. Photographer: Michael Nagle/Bloomberg
By Bloomberg Línea and Bloomberg News
October 28, 2022 | 07:13 PM

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

👑 Colombia leads in Latin America:

Latin American markets closed mixed on Friday, with the Colombian Colcap (COLCAP) and Mexico’s S&P/BMV IPC (MEXBOL) posting the strongest gains.

The Colcap advanced 0.65%, with the strongest gains from shares of Grupo de Inversiones Suramericana (PFGRUPSU), Grupo Argos (PFGRUPOA), Ecopetrol (ECOPETL) and Cementos Argos (CEMARGOS).

Ecopetrol announced on Friday a leadership reshuffle, appointing a new board chairman after the Colombian state-owned oil company’s previous incumbent was removed after just one day in office.

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Saul Kattan, who previously headed Empresa de Telecomunicaciones de Bogota took over as chairman. His appointment, announced in a document, came just one day after Carlos Cano, a long-time board member, was confirmed for the position.

Although President Gustavo Petro and his minister of mines and energy have said that the government will not grant new exploration licenses in the hope of moving the country’s economy away from fossil fuels, Colombia’s public credit director, José Roberto Acosta, told the press that new oil exploration contracts in Colombia will be determined by the nation’s fiscal needs and economic constraints.

📉 A bad day for Peru:

Peru’s El S&P/BVL(SPBLPGPT) closed with the region’s sharpest losses, down 0.38% on Friday with a poor showing from shares in the industrial, raw materials and public services sectors.

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The shares of Aenza SA (AENZAC1), Southern Copper (SCCO), which reported on Friday an adjusted EBITDA for the third quarter that exceeded the average estimate of analysts consulted by Bloomberg, and Volcan Compañía Minera (VOLCABC1) were among those that fell the most during the day.

On Thursday afternoon it was announced that Humberto Campodónico resigned as chairman of the board of Petroperú following fuel supply problems due to the company’s financial instability, and after the extraordinary capital contribution which amounts to $2.25 billion by 2022.

🗽 On Wall Street:

US stocks ended a turbulent week with a sizable gain as Apple Inc.’s earnings report buoyed technology shares and a smattering of economic data suggested a modicum of progress is being made in the Federal Reserve’s battle against inflation.

The S&P 500 and the tech-heavy Nasdaq 100 notched their longest weekly rising streak since August. Gains in big-tech companies including Microsoft Corp. and Google parent Alphabet Inc. helped both indexes snap a two-day decline on Friday.

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The S&P 500 gained 2.46%, the Nasdaq Composite (CCMPDL) 2.87% and the Dow Jones Industrial Average 2.59%.

Treasuries turned weaker on Friday, breaking a three-day rally after hopes of a Fed pivot fizzled. The dollar rose for a second straight session.

Stocks, bonds and the dollar whipsawed this week as investors attempted to make sense of conflicting earnings reports and economic data.

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Quarterly reports from megacap technology firms underscored the impact of the Fed’s tightening regime, and consequently the surging dollar. But overall, earnings still largely beat estimates, with Caterpillar Inc., which is considered a bellwether firm, highlighting strong buyer demand.

“This result season is turning out to be quite a strong result season, just like the second quarter was,” Anik Sen, global head of equities at PineBridge Investments, said by phone. “As you can see, the rally is very broad-based. It’s not necessarily stock specific. What’s moving the market is basically valuation. And the valuation is being teed off expectations of where the Fed is going land.”

Meanwhile, a core gauge of US inflation accelerated in September, bolstering the Fed’s case for another jumbo rate hike next week. But a contraction in manufacturing and services, and lower-than-expected US home sales, indicated that the Fed’s actions are already hitting the economy. Gross domestic product data, which came in on Thursday, briefly assuaged concerns of an imminent recession.

Economists are still expecting the Fed to raise rates by three-quarters of a percentage point for the fourth time in a row next week. Rates are projected to rise another half point in December, then by quarter points the following two meetings.

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“It is too early to expect the Fed to signal a more dovish stance,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. “We maintain our view for economic growth to bottom out in the middle of 2023 and for the Fed to stop hiking in 1Q23.”

Beyond the US

US investors also closely watched the actions of other central banks for possible hints about the Fed’s path ahead.

While the European Central Bank delivered a second straight 75 basis-point hike on Thursday, it dropped a prior reference to rate increases continuing for “several meetings,” an outcome that was considered dovish. On Wednesday, the Bank of Canada announced a smaller-than-expected rate hike, which briefly stoked speculation that the Fed could follow suit.

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On the currency markets, the Bloomberg Dollar Spot Index rose 0.2%, the euro was little changed at $0.9965, the British pound rose 0.4% to $1.1617 and the Japanese yen fell 0.8% to 147.44 per dollar.

🔑 The day’s key events:

Crude oil closed Friday with a weekly gain after reports showed that US fuel stockpiles declined and crude exports hit a record high, signaling solid demand despite bearish economic trends.

On a daily basis, crude oil fell today as a stronger dollar made commodities priced in that currency less attractive. West Texas Intermediate ended the day near $88 per barrel, after posting a weekly gain of 3.4%. Brent for December delivery closed at around $96.

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Oil is on track to end the month higher, after four months of declines. The decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies to cut production in November by 2 million barrels per day and the European Union’s sanctions on Russia have tightened supply prospects. In addition, refineries in China, the largest importer, have snapped up millions of barrels to boost fuel exports.

“Crude oil prices posted a weekly gain as diesel supplies approach dangerously low levels and hopes that the Chinese economy will recover before the end of the year,” said Edward Moya, senior market analyst at Oanda Corp.

🍝 For the dinner table debate:

Elon Musk is to take over as CEO of Twitter Inc. (TWTR) after completing his purchase of the social media company or $44 billion, which he will direct alongside his roles as head of Tesla Inc. (TSLA) and SpaceX.

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Musk intends to replace Parag Agrawal, who was fired along with other top company executives following the deal, said a person familiar with the matter, who requested anonymity while discussing internal matters. Musk is expected to be CEO for now, but could leave the post in the longer term, the person added.

Musk moves to be in charge of a social network that is struggling after six months of public and legal tensions. Among the first planned moves is a change in leadership: in addition to Agrawal, leaving the company will be Vijaya Gadde, head of legal, policy and trust; CFO Ned Segal, who joined Twitter in 2017; and Sean Edgett, who has been Twitter’s general counsel since 2012. Edgett was escorted out of the building, Bloomberg News reported.

Musk also intends to remove permanent bans on users because he doesn’t believe in lifetime bans, the person said. That means people who have been banned from the platform could return, including former US President Donald Trump.

Leidys Becerra, a content producers at Bloomberg Línea, and Isabelle Lee and Vildana Hajric of Bloomberg News, contributed to this report.