A roundup of Wednesday’s stock market results from across the region
👑 Brazil’s Ibovespa leads in Latin America:
In a volatile session for the Brazilian stock market, Petrobras (PETR3;PETR4) shares fell 9.80% and 7.93%, respectively. On Tuesday, the Chamber of Deputies approved amendments to the state property law, reducing the quarantine period for executives and directors who have participated in political campaigns, which opens the door for Lula to appoint politicians to key positions in state-controlled companies.
The Colombian Stock Exchange awarded 25% of the shares of BAC Holding International Corp to Esadinco, a company owned by banker Luis Carlos Sarmiento Angulo. The company had launched a takeover bid for the shares of Grupo Aval’s company, also owned by Sarmiento Angulo, at the beginning of November.
📉 A bad day for Argentina’s Merval:
The Argentine Merval (MERVAL) index fell 0.78% on Wednesday, despite the good performance of the agricultural and minerals sectors.
During the day, the Argentine government managed to place debt for 700 billion pesos ($4.06 billion), when 412 billion pesos were due. Thus, it obtained a surplus of 358 billion pesos. This extra debt is key for the Government, as it allows it to finance the deficit, which in December usually worsens, taking some pressure off the Central Bank, in terms of issuance.
The S&P/BVL Peru (SPBLPGPT) and Mexico’s S&P/BMV IPC (MEXBOL) both fell by 0.57%. In Peru, the Congress will debate on Thursday, December 15, the constitutional reform bill to bring forward the general elections. President Dina Boluarte stated that the electoral calendar could even be adjusted so that the voting could take place in December 2023.
Chile’s Ipsa (IPSA) dropped 0.39% at the close of trading.
🗽 On Wall Street:
US stocks snapped a two-day rally after Federal Reserve Chair Jerome Powell reiterated his hawkish stance while also signaling the central bank is getting “close” to reaching the end of a tightening cycle that pushed rates from near zero to 4.5% since March.
While Wednesday’s volatile session saw the S&P 500 and the Nasdaq 100 swing between gains and losses, both indexes ended lower after the Fed raised rates by half a percentage point and signaled more increases are to come. Treasuries whipsawed, with the policy-sensitive two-year yield initially surging after the Fed’s decision, only to almost entirely erase that jump later in the day. The dollar dropped for a second session.
The Nasdaq Composite (CCMPDL) dropped 0.76%, the S&P 500 0.61% and the Dow Jones Industrial Average 0.42%.
Powell indicated the Fed intends to keep at its battle with inflation, as officials projected rates would end next year at 5.1%. But his assertion that the cycle could be near an end was enough to ease the worst of the stock declines on Wednesday. The Fed also projects economic growth will slow next year, with inflation remaining well above its 2% target.
“Powell was crystal clear that the Fed is basically indifferent to inter-meeting moves in financial conditions but that they control those conditions over time,” said Gerard MacDonell of 22V Research.
Some investors saw the silver lining in Powell’s remarks.
“The most encouraging of Powell’s comments is the acknowledgment of how core inflation is coming down more than expected, as evidenced by new rental leases coming at levels significantly below data being used to calculate core CPI,” said Bryce Doty, senior vice president at Sit Investment Associates. “This is a big deal given that housing is the largest component of core CPI. Therefore, we wouldn’t be surprised if Powell uses this as a primary reason for halting rate increases at their May meeting.”
Following the Fed, the European Central Bank will announce its rate decision Thursday. Markets will also contend with decisions from the Bank of England and monetary authorities in Mexico, Norway, the Philippines, Switzerland and Taiwan.
On the currency markets, the Bloomberg Dollar Spot Index fell 0.3%, the euro rose 0.4% to $1.0679, the British pound rose 0.5% to $1.2424 and the Japanese yen rose 0.2% to 135.26 per dollar.
🔑 The day’s key events:
Oil continued its price rally on Wednesday, notching up three days of gains, after the International Energy Agency said oil prices in 2023 could rise if sanctions on Russia cause the country’s supplies to dwindle.
Russia’s output, which defied the agency’s earlier projections of a collapse this year, will fall 14% by the end of the first quarter, the Paris-based entity predicted in a report released Wednesday.
WTI crude oil gained 2.51% to settle at $77.28 per barrel, while Brent crude rose 2.74% to $82.89 per barrel. Both references trimmed part of their gains after the Fed’s decisions on its monetary policy.
The IEA, which advises the main economies, increased its world oil demand forecast for 2023 by 300,000 barrels per day, amidst the vigorous growth of India and the surprising resilience of China.
🍝 For the dinner table debate:
Binance Holdings Ltd. founder Changpeng “CZ” Zhao said outflows from the largest cryptocurrency exchange have “stabilized,” while warning employees that the industry’s recovery from the collapse of rival FTX will be “bumpy”.
In a tweet on Wednesday, Zhao said that “things seem to have stabilized” and that “deposits are coming back in.” He had previously said Binance saw about $1.14 billion of net withdrawals on Tuesday.
Binance has at least $60 billion in reserves on the blockchain, according to data from blockchain analytics firm Nansen.
Customers withdrew funds from Binance’s platform this week amid a lack of confidence in the cryptocurrency sector following the implosion of rival exchange FTX. Sam Bankman-Fried, co-founder of FTX, has been charged with fraud for allegedly misappropriating billions of dollars of customer money.
Binance endured a record daily net outflow of bitcoin and ether in terms of the number of tokens withdrawn on Tuesday, according to research firm CryptoQuant. The figures indicate that 40,353 bitcoins and 278,017 ether were withdrawn.
Sebastián Osorio Idárraga, a content producer at Bloomberg Línea, and Isabelle Lee of Bloomberg News, contributed to this report.