A roundup of Friday’s stock market results from across the Americas
👑 Colombia’s Colcap leads in Latin America:
On Friday, Latin American stock markets closed mixed, with the Colcap (COLCAP) leading the region’s peers for the second consecutive day. The Colombian index ended the session up 0.98%.
The Colcap rose driven by the strong performance of the financials, materials, and energy sectors. The performance of Bancolombia (BCOLO), la preferencial de Grupo Argos (PFGRUPOA) y Grupo Argos (GRUPOARG) shares pushed the index into positive territory.
It was learned that unemployment in Colombia is lower than a year ago, but the rate resists falling below double digits, at least in February. According to the Dane, during the second month of 2023, unemployment was 11.4%, a reduction of 1.5 percentage points (pps) compared to February 2022 (12.9%).
According to the statistical entity, in February 2023, 2.8 million people were reported unemployed or unemployable. Although the figure remains high, in annual terms there was a reduction of 365,000 people in this condition, since in February 2022 the figure was 3.2 million.
📉 A bad day for Argentina’s Merval:
Argentina’s Merval index (MERVAL) saw the sharpest loss in Latin America, closing 2,35% lower on Friday.
The shares of Banco BBVA Argentina (BBAR), Ternium Argentina (TXAR) and Banco Macro (BMA) suffered the sharpest falls.
Argentina is one of the three countries with the highest inflation in the world, after Lebanon and Venezuela, and the situation is far from calming down, according to the projections of the consulting firms that follow prices. In March, the Consumer Price Index (CPI) would show a value equal to or higher than 7% per month, if what the private sector expects is fulfilled.
If March inflation were 7%, the inter-annual value would reach 102.9%. It should be recalled that the official measurement for February showed 6.6% monthly and 102.5% year-on-year. Thus, the hope of the Minister of Economy Sergio Massa to enter a decreasing path, to converge to a 60% annual rate by the end of 2023, seems impossible.
🗽On Wall Street:
Technology shares extended the week’s US stocks rally after a key measure of inflation cooled last month, suggesting the Federal Reserve may be close to ending its rate-hiking campaign. Treasuries rose.
Excluding food and energy, the Fed’s preferred inflation gauge — the personal consumption expenditures price index — rose 0.3% in February, slightly below the median estimate. Meanwhile, the PCE price index was up 5% from a year earlier, a deceleration from January but far higher than the Fed’s 2% goal.
The S&P 500 rose 1.4% — bringing its weekly gains to 3.5%, the most since November — while the tech-heavy Nasdaq 100 (CCMPDL) gained 1.7%, helping it to notch its biggest quarterly gain since June 2020.
The Dow Jones Industrial Average gained 1.26%.
“Overall, it was a round of data consistent with the peak inflation narrative but also with the Fed’s insistence that there remains work to be done to re-establish price stability,” Ian Lyngen of BMO Capital Markets wrote in a note.
Treasuries also ended the quarter of wild swings higher on Friday as investors struggled to adjust for recent bank failures and the shifting outlook for interest rates. The two-year yield fell to around 4.05% Friday while the 10-year maturity dipped to 3.48%. The dollar strengthened against major peers.
“The S&P 500 has done well to recover from banking sector concerns over the past few weeks,” wrote Michael Gibbs, director of equity portfolio and technical strategy at Raymond James. “However, the rally has been a bit more uneven beneath the surface, reflecting the confusion inherent within the current backdrop.”
While technology stocks have risen to the highest since August 2022 — propelling gains in the broader market — the percentage of stocks above their 50-day moving average has contracted, Gibbs said. Only a small number of shares actually account for the US rally.
“Extremely narrow rallies are not healthy ones at all, so it is going to be essential for the bulls to see more groups participate in the rally going forward,” Matt Maley, chief market strategist at Miller Tabak + Co., wrote. “If they don’t, it will only be a matter of time before a correction in the big-cap tech names turns this nice rally into an ugly decline.”
Citigroup Inc. strategists said the focus among investors is set to shift from worries about high interest rates to the risks of a recession, and as that happens, US stocks look more attractive than those in Europe.
A Citi team led by Beata Manthey upgraded US stocks to overweight from underweight on Friday as they “perform more defensively than other markets” during earnings recessions. They expect global earnings-per-share to contract 5% in 2023 and say that analysts are likely to slash profit estimates even further.
Elsewhere in markets, oil traded in New York saw a weekly gain of 9% amid ongoing disruption to Iraqi exports. Bitcoin notched its best quarter since March 2021 with a gain of about 70%. And Digital World Acquisition Corp., the blank-check firm taking Donald Trump’s media company public, rallied after he became the first former president to be indicted.
The Bloomberg Dollar Spot Index rose 0.2%, the euro fell 0.6% to $1.0844, the British pound fell 0.4% to $1.2334 and the Japanese yen was little changed at 132.76 per dollar.
🍝 For the dinner table debate:
TikTok is expanding its presence in Latin America by opening an office in Bogota, Colombia and is preparing to open an office in Buenos Aires, Argentina. In an interview with Bloomberg Línea, Gabriela Comazzetto, TikTok’s Global Business Solutions leader for Latin America, said the Colombia office will serve the Andean region, while Buenos Aires will be the hub for the southern cone.
TikTok also has offices in Los Angeles, New York, London, Paris, Berlin, Dubai, Mumbai, Singapore, Jakarta, Seoul, Tokyo, Miami and Mexico City. “Latin America is an important market of users who use the platform daily for a long time, this generates a very big business opportunity for us,” said Comazzetto.
In recent days the company, owned by China’s ByteDance, launched TikTok Ads Manager, a self-service advertising platform for small and medium-sized companies in Chile. The tool was already available in Brazil and Mexico. “We strongly believe in the business potential of Latin America as a whole and that is why we are entering these markets with full force,” he said.
Leidys Becerra, a content producer at Bloomberg Línea, and Isabelle Lee and Peyton Forte of Bloomberg News, contributed to this report.
