A roundup of Friday’s stock market results from across the Americas
👑 Argentina maintains upward strength:
Latin America’s stock markets also got a headstart on Christmas and closed Friday in the green, with an outstanding performance of Argentina’s Merval (MERVAL), which gained 2.92% during the day.
“The Merval does not slacken its upward march and touches 185,000 points, a new historical high for the local stock market index. It accumulates a rise of more than 120% in the year, a rise that began at the end of June after overcoming a totally lateral trend in which the index could not surpass the barrier of 94,500 points”, wrote Mauro Natalucci, account executive at Rava Bursátil.
Colombia’s Colcap (COLCAP) and Brazil’s Ibovespa (IBOV) also gained on Friday and recovered from accumulated losses, advancing 2.05% and 2.00%, in their order.
After six months of negative variations, Fedesarrollo’s Business Opinion Survey for November evidenced that the confidence of traders and industrialists in Colombia recovered. On the one hand, the Commercial Confidence Index (ICCO) stood at 19.2% and the Industrial Confidence Index (ICI) at 0.1%.
Meanwhile, Brazil’s annual inflation slowed to its lowest level since March 2021, as the central bank reiterated its intention to keep its interest rates high. Specifically, the figure fell to 5.90%, according to data from the National Statistics Institute released on Friday. The month-on-month number was 0.52% since mid-November, slightly below the median estimate in a Bloomberg survey.
Mexico’s S&P/BMV IPC (MEXBOL) gained 0.96% on the day, Peru’s S&P/BVL (SPBLPGPT) advanced 0.79% and Chile’s Ipsa (IPSA) climbed 0.66% on Friday.
🗽On Wall Street:
US stocks ended Friday’s session with gains as investors digested data showing inflation is continuing to ease and the Federal Reserve’s rate hikes are serving their purpose.
Both the S&P 500 and the tech-heavy Nasdaq 100 still suffered their third week of losses, the longest losing streak for both indexes since late September, as investors this month grappled with a hawkish Fed and data pointing to a resilient economy that can handle more rate-hike pain.
The S&P 500 and the Dow Jones Industrial Average rose 0.59 and 0.53%, respectively, while the Nasdaq Composite (CCMPDL) gained 0.21%, trimming Thursday’s losses.
Treasuries ended a holiday-shortened session lower. The benchmark 10-year yield climbed the most this week since early April, ending Friday around 3.75%. The dollar suffered a weekly drop. This week’s gains took the yen to its highest level since June as the Bank of Japan’s sudden increase in its yield trading band is expected to encourage Japanese investors to bring money home.
Data on Friday showed the Fed’s closely watched measure of inflation cooling and consumer spending stagnating. Consumers’ year-ahead inflation expectations also dropped this month to the lowest since June 2021, a survey by the University of Michigan showed. Both sets of data calmed sentiment on Friday.
“I think there is very little depth of liquidity, and a lot of daily and weekly options. But it has seemed like really exaggerated moves relative to any news,” said Peter Tchir, head of macro strategy at Academy Securities. “It seems like we rally hard on ‘Santa’ and weaker inflation data and selloff hard on good data and eco fears.”
While central bank officials this year have repeatedly said that they’ll keep raising rates, markets have often shrugged off these warnings. But economic data has continued to keep investors on the edge. They’ve especially been attuned to information pertaining to jobs, since softening in the labor market is something the Fed is keeping an eye on.
“Historically, usually the market has been right, but in 2022 it’s been the Fed,” Jim Bianco, founder of Bianco Research, said on Bloomberg Television and Radio. “Are we going to get the pivot in 2023 or are we going to get the pivot in 2024? If the market doesn’t get the pivot, which it is expecting, I think there’s going to be some room for disappointment.”
Investors have cheered a moderation in inflation in recent months. But data underscoring a strong economy has often led to choppy sessions for markets, with some traders reassured that a US recession is still at bay while others fear this means the Fed will stay aggressive.
In commodity markets, everything from oil to gold and copper rose on Friday. Oil posted substantial weekly gain as Russia said it may cut crude production in response to the price cap imposed by the Group of Seven on its exports, highlighting risks to global supplies in the new year.
On the currency markets, the Bloomberg Dollar Spot Index fell 0.2%, the euro rose 0.2% to $1.0618, the British pound was little changed at $1.2049, and the Japanese yen fell 0.4% to 132.88 per dollar.
🔑 The day’s key events:
Oil, meanwhile, rose to a maximum level in the last three weeks and completed two consecutive weeks of gains, despite the low liquidity that analysts see in the market for the end of the year.
The WTI benchmark gained 2.67% to $79.56 per barrel, while the Brent benchmark advanced 2.63% to $83.92 per barrel.
Part of Friday’s gains were explained by a warning from Russia, in which it indicated that there could be a production cut of 700,000 barrels of crude per day, in the face of sanctions and price caps that have been imposed on the country’s oil.
Crude could still post a brief annual gain after a volatile year, in which Russia’s war in Ukraine roiled oil markets.
🍝For the dinner table debate:
Investors have sold stocks at record levels since various central banks reiterated their willingness to keep rates high to tame inflation, closing the worst year for equities since the global financial crisis.
Equity funds saw outflows of almost US$ 42 billion, the highest in history. This in a week where central banks such as the Federal Reserve, the European Central Bank and the Bank of Japan were firm in their monetary policy outlook for 2023.
This dashes bets of a near return to cheap money. Typical year-end trends contributed to the outflows. Figures from Bank of America Corp (BAC), Citigroup Inc (C) and Barclays Plc (BCS), all based on EPFR Global data, show that investors also withdrew capital from the bond and cash funds section in the week to December 21.
On an annual basis, stocks still reflect net inflows of $166.5 billion, suggesting that investors have not yet fully capitulated and that 2023 could bring further declines. Bond funds, by comparison, recorded outflows of $257 billion and Bank of America strategist Michael Hartnet has said he expects the asset class to outperform stocks in the first half of next year.
Sebastián Osorio Idárraga, a content producer at Bloomberg Línea, and Vildana Hajric of Bloomberg News, contributed to this report.
