A roundup of Monday’s stock exchange results from across the Americas
🌎 Argentina’s Merval leads LatAm gains:
Latin American stock exchanges contrasted with Wall Street’s performance and closed the day with gains, led by Argentina’s Merval (MERVAL), which rose 2.24%, boosted by Edenor S.A. (EDN) shares, which gained 10.28% during the day.
“The rarefied climate in New York did not affect the performance of Argentine companies, which kept climbing positions with outstanding performances such as those of Edenor. This advance was replicated in the local market and, as a result, the Merval started the week with a 2.24% increase and closed the day at 360,825 basis points”, wrote Fernando Staropoli, account executive at Rava Bursátil, in a commentary.
Colombia’s Colcap (COLCAP) also gained on Monday, advancing 0.33%, despite the political crisis that Gustavo Petro’s government is currently suffering, on account of the known audios of the now former Colombian ambassador to Venezuela, Armando Benedetti, and which involve particularities of the financing of the campaign of the now president.
The debates of the different reforms that the government presented to Congress were also suspended in Congress, according to the leader of the house David Racero, also due to the crisis within the Petro government.
🗽On Wall Street:
US equities edged lower Monday after both technology and energy stocks erased earlier gains in subdued trading volume.
Tech shares led the S&P 500 lower with Apple Inc. (AAPL) erasing gains of as much as 2% in anticipation of a new mixed-reality headset. Oil majors Chevron Corp. and Exxon Mobil Corp. also slipped after rallying earlier on higher oil prices following a Saudi Arabia supply cut.
Meanwhile, Treasuries drifted after a report the US services sector nearly stagnated in May. The Institute for Supply Management’s overall gauge of services unexpectedly fell to the lowest level of the year, offering a less upbeat assessment of the US economy.
A rally in Big Tech and optimism of a pause in interest rate hikes has driven major gains in the S&P 500. However, risks still loom with traders increasingly speculating the Federal Reserve will hold rates steady in June, but keep its options open for hikes later on.
“The weakness in the ISM surveys stands in contrast to the recent improvement in the S&P Global PMIs — which are currently consistent with positive GDP growth of about 2% annualized — and is clearly painting a dramatically different picture to May’s employment report,” said Andrew Hunter, deputy chief US economist at Capital Economics.
Taken with regional Fed activity surveys and other hard data, it could mean GDP growth will be barely above zero in the second quarter, Hunter said.
Saira Malik, chief investment officer at Nuveen, said she foresees a mild recession sometime in 2024 as the “growth-dampening effects of tight monetary policy work their way through the economy.”
“With high inflation likely to persist, we think investors would be well-served by allocating to real assets that can provide meaningful inflation protection,” she said, pointing to farmland.
In other news, Bitcoin fell after Binance Holdings Ltd. and its chief executive officer were accused of breaking US securities rules. Safran SA is in talks to acquire an arm of Raytheon Technologies Corp. in a transaction that could value the business at about $1 billion. And US regulators revoked emergency authorization for Johnson & Johnson’s Covid-19 vaccine after the company’s Janssen unit requested its withdrawal.
Elsewhere, equities in Europe slid and indexes in Asia were mostly higher. The Nikkei 225 rose 2.2% to the highest since 1990 as investors bet a weak yen will boost corporate profits. The dollar erased gains against peers. And gold gained.
The Bloomberg Dollar Spot Index was little changed, the euro was little changed at $1.0713, the British pound fell 0.2% to $1.2433 and the Japanese yen rose 0.3% to 139.57 per dollar.
🍝 For the dinner table debate:
Cryptocurrencies fall across the board on Monday after the SEC (U.S. Securities and Exchange Commission) accused Binance Holdings Ltd. of improperly handling funds and misleading regulators.
Bitcoin (XBT) plummeted to below $26,000. Binance Coin, the native token of the largest digital stock exchange on the planet, is underperforming the rest given its direct link to the event.
The charges are the latest regulatory action against Binance and its co-founder and CEO, Changpeng Zhao. Last March, the U.S. Commodity Futures Trading Commission (CFTC) said the company and Zhao routinely violated U.S. derivatives rules. The DOJ was investigating whether Binance was used illegally to allow Russians to circumvent U.S. sanctions and transfer money, as Bloomberg reported last May.
“In principle, people have already built it into prices,” Austin Campbell, an adjunct professor at Columbia Business School, said by direct message. “It’s more of a ratification of what was already expected and will only serve to continue the trend of offshoring everything and leaving the US behind.”
Paola Villar S., a content producer at Bloomberg Línea, and Isabelle Lee, Vildana Hajric and Carly Wanna of Bloomberg News, contributed to this story.