A roundup of Tuesday’s stock market results from across the Americas
🌎 Colombia leads the losses in LatAm:
The majority of Latin America’s stock markets closed lower on Tuesday, with the exception of Mexico’s Mexbol index (MEXBOL), which gained 0.11% with a boost from the shares of Cemex (CEMEXCPO), Genomma Lab Internacional (LABB) and Controladora Vuela (VOLARA).
The shares of Cemex, one of the world’s largest manufacturers of construction materials, rebounded after it reported first-quarter results that were better than analysts’ estimates. The Mexican company’s results were favored by the exchange rate fluctuation and the decrease in cost of sales. In addition, Actinver’s strategists described the results as positive.
Prior to the market opening, Cemex announced that EBITDA grew 6% at annual rate, while net income rose 14% in the first quarter of the year. “After this positive quarterly report, we anticipate a positive reaction in Cemex’s share price,” said Actinver’s senior materials analyst, Ramón Ortiz.
Meanwhile, Colombia’s Colcap (COLCAP) led the losses among its peers in the region after dropping 3.40%, dragged down by the shares of Ecopetrol (ECOPETL), Organización Terpel (TERPEL) and (GRUPOARG)
On Tuesday, Ecopetrol shares fell 9.40%. For Andrés Moreno, stock market analyst, this was due to two reasons: “first, yesterday the share had already been falling in the US stock market by 3%, today additionally oil fell 4%, so it is correcting the fall in the price of oil, but Ecopetrol does not only move with the price of oil, many times oil falls and the share does not”.
And the second reason is political risk “that has been present since last week due to the change of the ministerial cabinet and obviously due to the speech of President Gustavo Petro that generates fears, makes the dollar go up and some stocks tend to fall”.
On May 1, Labor Day, the head of state said from the balcony of the Casa de Nariño that “reforms can lead to a revolution. The attempt to restrict reforms may lead to a revolution. What is needed anyway is that the people be mobilized as they were with Bolivar, with Melo, with Lopez Pumarejo and Gaitan”, he said, referring to renowned figures from the country’s history.
🗽On Wall Street:
Just a day after Wall Street breathed a sigh of relief with the rescue of First Republic Bank, a selloff in US regional lenders fueled renewed anxiety over financial stability, sinking stocks across the board and spurring a flight to the safest corners of the market.
For many traders, the timing couldn’t be worse.
On the eve of the Federal Reserve decision, multiple volatility halts in PacWest Bancorp and Western Alliance Bancorp were seen as disturbing. Both shares were down at least 15%. The financial industry weighed heavily on the S&P 500, which sank almost 2% at one point before trimming losses.
Bearish hedge-fund traders were present in the bout of selling that erupted Tuesday and later prompted long-only investors to sell too, according to a note from John Flood, a partner at Goldman Sachs Group Inc.
“Wall Street is quickly hitting the sell button as banking turmoil appears it is not going away anytime soon,” said Ed Moya, senior market analyst at Oanda. “Risk appetite did not stand a chance as traders focused on lingering doubts over the regional banks, rising recession odds, and growing risks that the US could default on its debt next month.”
All of these factors combined are only deepening a sense of uneasiness among investors about the Fed’s conundrum.
The S&P 500 slid 1.16%, the Dow Jones Industrial Average 1.08% and the Nasdaq (CCMPDL) 1.08%.
In addition to the financial strains stemming from bank failures, officials remain caught between stubbornly high inflation and data pointing to an economic downturn — such as Tuesday’s JOLTS record of job openings that fell to lowest in nearly two years.
Debt ceiling
To make matters worse, there’s brewing angst over the US debt ceiling — which only adds to the whole discussion on whether the Fed should pause after hiking in May to prevent a more severe economic recession.
While swaps are still pricing in a quarter-point Fed rate increase on Wednesday, traders trimmed their bets on a subsequent hike — while amping up wagers on cuts before the year is over.
With all those elements in play, it shouldn’t come as a surprise that bonds got heavily bid Tuesday — especially after the selloff of the previous session. Two-year rates, which are more sensitive to imminent Fed moves, plunged as much as 21 basis points to below 4%.
Meantime, Treasury bill yields for June topped 5% in the wake of a warning from Janet Yellen that the US government could run into debt-ceiling limitations as soon as the start of next month.
On the currency markets, the Bloomberg Dollar Spot Index fell 0.2%, the euro rose 0.3% to $1.1007, the British pound fell 0.2% to $1.2476 and the Japanese yen rose 0.7% to 136.48 per dollar.
🍝 For the dinner table debate:
Coca-Cola (KO) is so widespread that it is hard to imagine a world without it, but there are three countries where it is not sold.
Since 1950, following North Korea’s invasion of South Korea, in pursuit of reunification, the United States applied economic sanctions, including a trade embargo, which has led to that country not having Coca-Cola, at least officially.
In addition, although the US and Cuba restored diplomatic relations in 2015, the US continues to impose tough sanctions, including the trade embargo on the island, making it illegal for US companies to do business with Cuba. In that regard, Coca-Cola cannot sell its soft drink to Cuba.
Finally, Russia has been the most recent to join the club of countries without Coca-Cola, as a result of the war in Ukraine. In March 2022, the company announced that it had halted all production and sales of its brands in Russia.
Leidys Becerra, a content producer at Bloomberg Línea, and Rita Nazareth of Bloomberg News, contributed to this report.
