A roundup of Thursday’s stock market results from across the Americas
🌎 Argentina’s Merval leads LatAm Gains:
Latin American stock markets also had a mixed performance, with a marked recovery of Argentina’s Merval (MERVAL), which gained 1.30%, with a positive result of Ternium Argentina S.A. (TXAR), which rose 3.4%.
“While the agreement between the economic team and the International Monetary Fund continues, the stocks that got the attention were those linked to the export sector. In line with the above, the IMF is still pressuring with a strong devaluation and the Ministry of Economy is trying to avoid it in a context of low international reserves”, wrote Leonel Buccolo, account executive at Rava Bursátil.
Argentine companies are taking the opportunity to refinance their debt at rock-bottom interest rates as investors brace for more financial volatility ahead of next month’s primary elections.
Brazil’s Ibovespa (IBOV) and Chile’s Ipsa (IPSA) also made gains on Thursday, albeit slight, rising 0.45% and 0.04%, respectively.
Meanwhile, the Mexican Stock Exchange (MEXBOL) fell 0.33% and the Lima Stock Exchange (SPBLPGPT) fell 0.40%.
The almost six-year drought on the Mexican Stock Exchange could begin to reverse after an improvement in market valuations following the appreciation of the peso and the performance of the Mexican Stock Exchange’s Price and Quotations Index, according to its CEO, José-Oriol Bosch. “The valuations we are seeing in the market are more attractive. We do not have, to our knowledge, a company that is thinking of exiting the market,” he said.
The Colombian Stock Exchange did not trade on account of the national holiday commemorating Independence Day.
🗽On Wall Street:
US equities and Treasuries fell Thursday as investors digested a round of disappointing tech earnings and fresh signs of labor-market resiliency that could support another hike in interest rates this year.
The tech-heavy Nasdaq 100 fell 2.3%, with Netflix Inc. notching its biggest decline of the year after a disappointing revenue forecast. Tesla Inc. slid after profitability shrank in the second quarter. And the yield on 10-year Treasuries rose 10 basis points as an unexpected drop in weekly initial jobless claims prompted traders to price in higher odds of a quarter-point rate hike beyond the Federal Reserve’s meeting next week.
The losses are hitting the pause button on this year’s blistering stock rally that’s seen the S&P 500 rise 18%, and the Nasdaq 100 gain 41%, against a shaky economic outlook during the Fed’s aggressive tightening campaign.
“In the last 24 hours alone there has been talk of a worsening of the conflict in Ukraine, a further slowdown in China and major US banks facing significant real estate losses,” Lewis Grant, senior portfolio manager at Federated Hermes, wrote in a note. “Each of these threats, along with uncountable unknowns, has the potential to halt the sentiment rebound in its tracks.”
On Wednesday, wheat prices had surged following an escalation of tensions between Russia and Ukraine in the Black Sea. Goldman Sachs Group Inc. had reported a plunge in profits. And early Thursday, China had stepped up its support for the yuan amid a ramp up in rhetoric to bolster business confidence.
Against such a backdrop, returns on the back of a handful of tech stocks are “overdone” and may be the precursor to a downturn, Aegon Asset Management strategist Cameron McCrimmon warned.
“The breadth of returns on the S&P 500 has become increasingly narrow, driven by a few mega-cap tech stocks on AI optimism, which is a classic sign of an ageing bull,” McCrimmon wrote in a note.
The sentiment was echoed by Louise Goudy Willmering, a partner at Crewe Advisors.
“To be just driven simply by a few names in technology is not great,” Goudy Willmering said by phone. “Earnings will definitely determine where we go from here as we look into the third and fourth quarters.”
In Europe, tech stocks including ASML Holding NV slumped after Taiwan Semiconductor Manufacturing Co. cut its outlook despite the boom in AI development. Meanwhile, equities in Asia including Japan, Hong Kong and mainland China fell.
Elsewhere, the dollar reversed losses to trade stronger against major peers. Gold declined and the price of oil wavered.
- The Bloomberg Dollar Spot Index rose 0.4%
- The euro fell 0.6% to $1.1131
- The British pound fell 0.6% to $1.2864
- The Japanese yen fell 0.3% to 140.09 per dollar
🍝 For the dinner table debate:
Navigating the investment world involves managing risk, and the past year has presented a whole host of warning signs. From recession worries to conflicts such as the war in Ukraine and geopolitical tensions around the world, investors have faced an uncertain path in their quest for returns. Looking ahead, the next decade is expected to be equally fraught with challenges.
To learn more about the potential pitfalls ahead, we sought the views of three veteran investors with extensive experience in fund management.
Boaz Weinstein, co-founder of Saba Capital Management, a hedge fund that thrives amid high volatility; David Rubenstein, the billionaire co-founder of private equity firm Carlyle Group Inc. and Ida Liu, global head of private banking at Citigroup Inc. (C) shared their perspectives on the most significant risks they foresee over the next five to 10 years.
Sebastián Osorio Idárraga, a content producers at Bloomberg Línea, and Cecile Gutscher and Isabelle Lee of Bloomberg News, contributed to this report.