Latin American Markets, NYSE Close Lower After Day of Crypto Chaos

Argentina’s and Brazil’s stock markets closed with the steepest losses in Latin America, while the NYSE also closed lower as investors await inflation data to be announced Thursday

Sam Bankman-Fried, chief executive officer of FTX Cryptocurrency Derivatives Exchange, during the Bitcoin 2021 conference in Miami, Florida, US, on Saturday, June 5, 2021. Photographer: Eva Marie Uzcategui/Bloomberg
By Bloomberg Línea and Bloomberg News
November 09, 2022 | 10:35 PM

Read this story in

Spanish

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

📉 A bad day for Latin America’s markets:

Latin American stock markets followed the mood of the US markets and closed lower. Argentina’s Merval (MERVAL), Brazil’s Ibovespa (IBOV) and Chile’s Ipsa (IPSA) posted the sharpest losses on Wednesday, after he latter two indices had registered the highest gains on Tuesday.

Argentina’s benchmark stock index registered a loss of 3.27%, with the sharpest declines for the shares of . YPF SA (YPFD), which shed 7.5%, and Transportadora de Gas del Sur (TGSU2) , which dropped 5.8%, and Loma Negra (LOMA), which closed 5.7% lower.

PUBLICIDAD

For its part, the Ibovespa dropped 2.22%, dragged down by the performance of the finance, non-basic consumer products and real estate sectors. Banco Bradesco (BBDC4 and BBDC3) dropped after publshing its third-quarter results, during which its profits dropped 22.8%.

In a conference call with analysts, Bradesco’s CEO, Octavio de Lazari Junior, described the scenario as a “perfect storm” and warned of an equally challenging fourth quarter, with the forecast of a possible sale of the credit portfolio and additional provisioning to cover debtor risk.

The performance of Qualicorp Consultoria e Corretora de Seguros SA (QUAL3) and Americanas (AMER3) also affected the performance of the Brazilian index.

The Chilean stock market closed with a drop of 1.03%. The non-basic consumer products, communication services and industrials sectors weighed on its performance. Shares of (RIPLEY), Compañía Sudamericana de Vapores (VAPORES) and Banco Santander de Chile (BSAN) saw the sharpest losses.

PUBLICIDAD

The Central Bank of Chile warned Wednesday that the real estate sector is losing dynamism in sales. The monetary authority said that the financial difficulties of the real estate and construction sectors are causing “special concern at this juncture”, pointing out that companies in this industry experienced relevant cost increases, which added to a lower activity compressed their margins and deteriorated their payment capacity.

🗽 On Wall Street:

US stocks declined on Wednesday as renewed selling in cryptocurrencies and disappointing earnings weighed on risk sentiment ahead of a key inflation report. The dollar gained for the first time in four days.

The S&P 500 put paid to a three-day rally, with all 11 major industry groups in the red. The tech-heavy Nasdaq 100 dropped the most among benchmarks, closing down 2.4%. Walt Disney Co. and News Corp. tumbled after posting results that fell short of expectations. Bitcoin dropped below $16,000 to a level not seen since 2020 amid a deepening selloff in cryptocurrencies as Binance walked away from its planned takeover of FTX.com.

The S&P 500 stalled a three-day stretch of gains and closed 2.08% lower, the Nasdaq Composite (CCMPDL), dropped 2.48% and the Dow Jones Industrial Average 1.95%.

After midterm elections failed to deliver a Republican sweep, attention shifted toward the closely watched inflation report due Thursday for clues on the path of Federal Reserve policy tightening.

“Elections matter, but other factors matter more for markets and the economy,” Keith Lerner, co-chief investment officer at Truist Wealth, said in a note. “The path of inflation, interest rates, monetary policy, the economy, and earnings will continue to exert the greatest influence on markets over the next year.”

PUBLICIDAD

US inflation probably moderated slightly in October, with the consumer price index and the core measure that excludes food and energy both seen cooling on an annual basis. But with the overall annual inflation rate exceeding forecasts in six of the prior seven months, another upside surprise could dash hopes of a Fed downshift after four jumbo rate hikes.

On the election front, investors had eyed prospects of a Republican comeback in Congress, with GOP taking control of both the House of Representatives and Senate. But US voters delivered a mixed verdict, with Republicans heading for control of the House by smaller margins than forecast and the race for Senate still wide open.

On the currency markets, the Bloomberg Dollar Spot Index rose 0.6%, the euro fell 0.6% to $1.0011, the British pound fell 1.7% to $1.1349 and the Japanese yen fell 0.6% to 146.52 per dollar.

🔑 The day’s key events:

The crisis in the cryptocurrency market continues to worsen. This Wednesday, Bitcoin (XBT) fell to its lowest levels in two years as Binance withdrew its takeover bid for FTX.

PUBLICIDAD

The decision, according to a Binance statement, came after reviewing the company’s structure and books. “Our hope was to be able to support FTX customers and provide liquidity, but the issues are beyond our control and ability to help,” the crypto exchange said.

PUBLICIDAD

During the day, media outlets had reported on the possibility of Binance not proceeding with the acquisition of the rival exchange, saying that in doing due diligence executives found that the gap between FTX’s assets and liabilities likely runs into the billions of dollars, and probably more than $6 billion.

El Bloomberg Galaxy Crypto Index ha caído un 75% desde su máximodfd

Bitcoin, the largest token by market value, fell as much as 14% to $16,109 on Wednesday, the lowest since November 2020. This week’s drop is already more than 20% after it hit an all-time high of nearly $69,000 a year ago.

The drop in the digital currency weighed on the performance of virtually all digital assets. Ether, Solana, Polkadot and Avalanche also fell. FTT, the FTX exchange’s utility token, plunged more than 40% after a more than 70% drop on Tuesday, while Solana plunged as much as 46% on Wednesday and has lost more than half its value this week alone.

PUBLICIDAD

“The market is now in fear mode,” said Ilan Solot, co-head of digital assets at Marex Solutions. “Because Pandora’s box has been opened with this Binance-FTX deal and now everyone is looking at whether there are more dominoes and what else needs to be liquidated.”

🍝 For the dinner table debate:

Mark Zuckerberg, CEO of Meta Platforms Inc (META), announced Wednesday that the company will cut 11,000 jobs, the social network’s first mass layoff in its history. The figure represents about 13% of the total workforce, and the company will extend its hiring freeze through the first quarter of 2023.

“I want to take responsibility for these decisions and how we got here,” Zuckerberg said in the statement. “I know this is hard for everyone, and I’m especially sorry for those affected.”

PUBLICIDAD

The company said the layoffs will take place in different areas of the company. Its recruiting team will see the broadest cuts and those in business will see “more substantial” restructuring. Meta will also reduce its real estate presence, reverse its infrastructure spending and move some employees to desk sharing. More announcements of cost reductions are expected in the coming months.

Leidys Becerra, a content producer at Bloomberg Línea, and Stephen Kirkland of Bloomberg News, contributed to this report.