Latin American Markets Slide, NYSE Closes Mixed As Rate-Hike Fears Haunt Investors

All of Latin America’s markets closed lower on Friday, with Argentina’s Merval index seeing the sharpest losses, sliding 3.21%

Pedestrians pass the Brasil Bolsa Bacao (B3) stock exchange in São Paulo, Brazil. Photographer: Patricia Monteiro/Bloomberg
By Bloomberg Línea
February 17, 2023 | 09:13 PM

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

📉 Argentina leads Latin American stock slump:

Latin American stock markets closed in the red on Friday, amid caution in the US markets. Argentina’s Merval (MERVAL) was the Latin American indicator that fell the most, sliding 3.21%.

The shares of Grupo Supervielle (SUPV), Telecom Argentina (TECO2) and YPF (YPFD) saw the sharpest losses.

“The local market throughout the week showed positive quotes in terms of equities. However, the assets that make up the leading panel ended the last trading session with quotes tinged in red; this may be due to profit taking before a long weekend for the market”, said Priscila Bruno, analyst at Rava Bursátil.


On domestic issues, Argentina’s poultry sector is on alert as both poultry meat and egg production are threatened by the avian flu that was confirmed this week in the country and in Uruguay.

“It is very bad news, because of the consequences it can bring in terms of bird mortality and production losses,” said Javier Prida, president of the Argentine Chamber of Poultry Producers (CAPIA).

And the alert is not exaggerated, this flu is easily transmitted and can affect a sector that in 2022 exported more than $1 billion and projected a 4% growth for this year. “At the moment it is an isolated case in a wild bird and we are with the systems activated to mitigate the transfer to commercial backyards,” CAPIA said.


🗽On Wall Street:

US equity indexes were mixed Friday as dip buyers brushed off hawkish comments by Federal Reserve officials to help keep weekly losses at a minimum.

The S&P 500 Index dropped 0.3% after falling as much as 1%, lifted by consumer staples and utility stocks. The benchmark closed down 0.3% on the week but the Nasdaq 100 managed to gain 0.4% in the five-day period.

The Nasdaq 100 (CCMPDL) declined 0.58%, but the Dow Jones Industrial Average climbed 0.39%.

Traders fully priced in quarter-point interest rate increases at the Fed’s next two meetings after policymakers said Thursday that bigger hikes were not out of the question.


Federal Reserve Bank of Richmond President Thomas Barkin said Friday that he favored a quarter-point interest rate hike in February to give the central bank “flexibility” in its quest to tamp down inflation. Fed Governor Michelle Bowman said rates need to keep going higher since inflation remains “much too high.”

“Markets seem to be in a new tug of war, with the Treasury curve reflecting higher-for-longer, and equities signaling the potential for a soft landing,” said Art Hogan, chief market strategist at B. Riley. “That dichotomy seems to manifest in equity markets opening lower every day, like today, and then clawing back losses.”

Investors have been upping bets on how far the Fed will raise rates this tightening cycle. They now see the federal funds rate climbing to nearly 5.3% in July, according to trading in the US money markets. That compares with a perceived peak rate of 4.9% at the start of the month.


“If investors are really finally starting to believe the Fed about their claim that rates will stay ‘higher for longer,’” Matt Maley, chief market strategist at Miller Tabak + Co., wrote, “we could be looking at a significant decline in the weeks ahead.”

Friday’s index trading volumes remained somewhat below their 30-day averages during February’s options expiry, though the day’s sharp moves could have reflected the growth of fast-twitch options.

“Markets are acting weird,” said Cliff Hodge, chief investment officer for Cornerstone Wealth. “The narrative for bulls has changed from soft-landing to strong economy. What this ignores is that strong economy means a more aggressive Fed, which means higher rates and stronger dollar. Neither of these support current valuations. Bulls could be on borrowed time.”

Deere & Co. shares rose 7.5% Friday — the most in two years — after the world’s biggest tractor maker raised its earnings guidance above estimates thanks to sustained high crop prices that kept farmers spending.


Bank of America Corp. strategists wrote that the delayed arrival of a recession will weigh on US stocks in the second half of the year, noting that a resilient economy thus far means interest rates will stay higher for longer.

A BofA team led by Michael Hartnett is among those predicting a scenario known as “no landing” in the first half, where economic growth will stay robust and central banks will likely remain hawkish for longer. That will probably be followed by a “hard landing” in the latter part of 2023, they wrote.Bitcoin posted a fourth straight day of gains Friday, even after the US Securities & Exchange Commission accused Do Kwon and Terraform Labs Pte of fraud over the wipeout of digital currencies he created.

In commodities, oil capped its longest string of daily losses on the year as rising US inventories and the prospect of further tightening by the Federal Reserve eclipsed the lift from signs that Chinese energy demand is improving.


The Bloomberg Dollar Spot Index fell 0.1%, the euro rose 0.2% to $1.0696, the British pound rose 0.4% to $1.2043 and the Japanese yen fell 0.2% to 134.20 per dollar.

🍝For the dinner table debate:

This weekend will be a longer one in Argentina, Brazil, Ecuador and Venezuela due to carnival, celebrated on Monday, February 20, and Tuesday, February 21. In the four countries, the festivities are expected to stimulate consumption and boost tourism.

In Argentina, the holidays are fixed by law and will be in force throughout the country. Since they are not working days, employers will have to pay double to those employees who work. s.


In Ecuador, the holidays will be for national holidays linked to religious and indigenous community celebrations. The long weekend will try to encourage, above all, domestic tourism, which is why the government will reduce VAT from 12% to 8% between Monday and Tuesday.

In Venezuela, on the occasion of Carnival, the government of President Nicolás Maduro will distribute a ‘carnival bonus’, meaning that many Venezuelans will be able to access the bonus of 88 bolivars, that is, $3.60, according to the official exchange rate.

In Brazil, the carnival will mean a shelling out of a multi-billion-real expenditure on tourism-related activities, and this year is expected to be no exception.

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