Latin American Markets Close Higher; Bank Stocks Buoy Wall Street

Argentina’s Merval maintained its lead with the sharpest gains in the region on Wednesday, while the NYSE continues to recover from the recent shocks in the banking sector

By Bloomberg Línea
March 29, 2023 | 09:03 PM

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

👑 Argentina’s Merval leads the gains:

Latin American stock markets followed the good performance of the US markets on Wednesday and closed higher, led by Argentina’s Merval (MERVAL) led today’s gains, as did Chile’s Ipsa (IPSA).

The performance of Transportadora Gas del Norte (TGNO4), Aluar Aluminio Argentino (ALUA) and YPF (YPFD) shares boosted the Argentine index, which climbed 2.77%.

Argentina’s economic activity rebounded in January, breaking a negative streak of four consecutive months. The country’s statistics and census bureau (INDEC) published its Monthly Estimator of Economic Activity (EMAE) Wednesday, which showed a seasonally adjusted improvement of 0.3% compared to December, while the year-on-year increase was 2.9%.


The EMAE results exceeded the expectations of analysts consulted this week by Reuters, who had forecast a positive year-on-year variation of 0.2% in the first month of 2023.

At the end of January of this year, analysts consulted monthly by the Central Bank had forecast a growth of 0.5% for 2023. However, most of the country’s economic consultants are already anticipating that a drop in exports of between $15-20 billion this year, as a result of the drought, will probably result in a recession.

On the other hand, Chile’s IPSA index (IPSA) closed with a gain of 1.32%, driven by the good performance of the utilities, finance and industrial sectors. The shares of Enel Chile (ENELCHIL), Enel Américas (ENELAM) and Banco de Credito e Inversiones (BCI) saw the best performances of the day.


🗽On Wall Street:

US stocks advanced as risk appetite continued to recover from turmoil in the banking sector, led by gains in technology and financial shares.

The tech-heavy Nasdaq 100 entered a bull market, rising 20% from a December low. The S&P 500 powered back above 4,000, with 92% of components ending higher — the first time that has happened in 2023, according to Susquehanna. Meanwhile, the Cboe Volatility index closed at the lowest in three weeks.

The S&P 500 climbed 1.42%, the Nasdaq Composite (CCMPDL) 1.79% and the Dow Jones Industrial Average 1.00%.

US Treasuries were little changed and the dollar strengthened as investors digested the latest remarks by Fed officials and looked ahead to core PCE data for the clues on how the Fed’s path for interest rates might change after turbulence in the financial sector upended market expectations.


Financial stocks were hit hard by the collapse of three US banks this month but were able to stage a rally Wednesday, even after a report the Federal Deposit Insurance Corp. was mulling a squeeze on big banks to help cover the almost $23 billion in costs from the bank failures.

Wall Street strategist are struggling to predict how US stocks might react in the months ahead, given the uncertainty of the Fed’s path forward. Their average year-end target for the S&P 500 has stayed at 4,050 for a third straight month in a streak of inaction not seen since 2005.

“The Fed remains in a very difficult position (largely of its own doing),” wrote Chris Senyek of Wolfe Research in a note. “With banks stabilizing, inflation still way above target, the labor market still historically strong, and the Fed desperately needing to rebuild credibility, our sense is that the FOMC will hike by 25 basis points on May 3. However, Powell does not like to surprise markets, so this is far from a certainty.”


Fed Chair Jerome Powell pointed to Fed officials’ forecast for another quarter percentage-point hike this year when asked by lawmakers Wednesday when the central bank will stop raising interest rates, Bloomberg News reported. However, traders are pricing in roughly 50-50 odds that move will occur at the Fed’s next meeting in May.

With easing concerns about the safety of bank deposits, Peter Tchir of Academy Securities said analysts are turning their attention back to examining the economy and prepping for upcoming earnings.

In the latest batch of corporate results, Lululemon Athletica Inc. jumped after its earnings and outlook topped estimates. A profit drop at Jefferies Financial Group Inc. could spell trouble for other bank earnings. Meanwhile, weaker homebuying demand from a March survey of real estate agents could be a potential early sign buyers are unnerved by the turmoil in the banking sector.

Gold fell, Bitcoin extended its climb to $28,500, and oil erased an earlier gain from a decline in US crude stockpiles.


The Bloomberg Dollar Spot Index rose 0.2%, the euro was little changed at $1.0840, the British pound fell 0.2% to $1.2313 and the Japanese yen fell 1.5% to 132.83 per dollar.

🍝 For the dinner table debate:

The economies of Latin America, like the world economy as a whole, slowed abruptly in 2020, as a result of the quarantines imposed by countries to curb the coronavirus. In 2021, the region’s economies managed to recover a good part of the setback from a rebound and in 2022 they had generalized growth, although in many cases it is still difficult for them to recover the ground lost due to the pandemic.

Which Latin American Countries Enjoyed the Sharpest GDP Growth In 2022?

Regarding the last year, the most outstanding economic expansion was in Panama (with GDP growth of 10.8%) and Colombia (10.5%), in addition to Venezuela (13.3%, according to private measurements), although in the latter case it is difficult to obtain credible figures and that, in addition, it is a recovery within the framework of a phenomenal crisis that the country is undergoing.


Ecuador is also expected to show significant growth once the consolidated data is released. At the other extreme, the country that grew the least was Paraguay, which barely maintained the previous year’s level.

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