A roundup of Thursday’s stock market results from across the Americas
👑 Mexico leads LatAm gains:
Latin American stock markets closed higher on Thursday, outperforming U.S. markets. The S&P BMV/IPC (MMEXBOL) closed as the index with the highest gains among its peers in the region.
The Mexican stock market closed up 1.11%, supported by the strong performance of the consumer staples, communication services and non-core consumer products sectors.
The shares of Fomento Económico Mexicano, FEMSA (FEMSAUBD), the Mexican conglomerate that owns the Oxxo chain of stores, rose 8.64% following the announcement of the sale of its stake in the Heineken brewery.
On February 15, the retail and bottling conglomerate announced that it would sell its stake in the beer producer Heineken, a move that is part of a strategic business plan.
With this move, FEMSA, which owns 14.76% of the shares, seeks to concentrate resources in businesses such as Oxxo, gas stations, bottling and fintech as it seeks to maximize value creation in the long term and focus on key vertical businesses.
🗽On Wall Street:
US equity indexes closed firmly in the red Thursday after two Federal Reserve officials said they were considering 50 basis-point interest rate hikes to battle persistently high inflation.
The S&P 500 Index fell 1.4% and the Nasdaq 100 (CCMPDL) sank 1.9%. Yield on the benchmark 10-year Treasury surged past 3.8% to the highest level this year. The Dow Jones Industrial Average dropped 1.26%.
Federal Reserve Bank of Cleveland President Loretta Mester said she had seen a “compelling economic case” for rolling out another 50 basis-point hike, and St. Louis President James Bullard said he would not rule out supporting a half-percentage-point increase at the Fed’s March meeting, rather than a quarter point.
Their warnings came after US producer prices rebounded in January by the most since June. New home construction retreated for a fifth month in January as elevated mortgage rates continue to keep a lid on housing demand. Weekly jobless claims fell to 194,000, below expectations of 200,000.
“You will not sustainably get to 2% inflation when you have a labor market that is this tight,” Steve Chiavarone, senior portfolio manager and head of multi-asset solutions at Federated Hermes, said by phone. “It is so completely out of whack.”
“The data that’s been coming in I think is confusing a lot of investors and confusing the market overall,” Kristen Bitterly, head of North America investments at Citi Global Wealth, said in an interview. “We believe that the rally that we’ve seen is actually a very technically driven rally. It’s not one that is based on fundamentals, which is why we’re not buying in at these levels.”
“Overall, layoffs remain low, suggesting companies remain reluctant to reduce their workforce for now,” wrote Rubeela Farooqi, chief US economist at High Frequency Economics. “A rapid rise in interest rates has yet to impact the labor market. But an adjustment is likely over coming months as the cumulative and lagged effects of restrictive monetary policy spread more broadly through the economy.”
Thursday’s economic prints added further details for Fed policymakers plotting the path for rate hikes, after Wednesday’s US retail sales in January jumped by the most in almost two years.
Investors have been upping their bets on how far the Fed will raise rates this tightening cycle. They now see the federal funds rate climbing past 5.2% in July, according to trading in the US money markets. That compares with a perceived peak rate of 4.9% just two weeks ago, and the central bank’s current 4.5% to 4.75% target range.
The Dow Jones Industrial Average dropped 1.3%. So far this year the 30-member blue-chip gauge is up about 2%, compared with a roughly 7% gain in the S&P 500. The 5 percentage-point gap between the two makes the Dow’s start to a year the weakest relative to the S&P 500 since 1934, data compiled by Bloomberg show.
The Bloomberg Dollar Spot Index rose 0.1% to the highest since Jan. 6, the euro fell 0.1% to $1.0673, the British pound fell 0.4% to $1.1987 and the Japanese yen rose 0.2% to 133.94 per dollar.
🍝 For the dinner table debate:
Despite the plummeting prices of popular cryptocurrencies such as bitcoin, which now stands at over $24,000, and the blows that this market has received on account of the so-called ‘cryptowinter’ with the fall of some key players such as FTX, this channel remains popular among remote workers in Latin America.
This at least is the conclusion of the Global Recruitment report by Deel Lab for Global Employment, which shows how these types of operations have evolved in the withdrawals made by remote workers in Latin America.
“Phenomena such as inflation, depreciation of local currencies, among others, have created a need for workers: to diversify their income and take care of their savings. Receiving their salaries, or part of them in cryptocurrencies, allows them to shield themselves against fluctuating exchange rates, invest and have greater flexibility in their finances,” Natalia Jimenez, regional manager for Spanish-speaking Latin America at Deel, told Bloomberg Línea.
Despite falling prices, in Latin America payment to remote workers through these channels increased between January and December last year from 61% to 64%. In fact, the report shows that Latin America is the region where these workers most choose to be paid with cryptocurrencies.
Leidys Becerra, a content producer at Bloomberg Línea, and Isabelle Lee and Emily Graffeo of Bloomberg News, contributed to this report.