A roundup of Thursday’s stock market results from across the Americas
👑 Chile’s IPSA leads in Latin America:
The only Latin American stock exchange to close in positive territory was Chile’s IPSA (IPSA), which closed with a slight gain of 0.10%. The real estate, non-core consumer products and consumer staples sectors drove the index to close in the green.
Enap, Chile’s state-owned oil and gas company, announced that it plans to use its near-record earnings to reduce its debt burden, while increasing investment in its refineries and in exploration and production.
The company aims to reduce its debt burden to around US$3 billion in the “medium term” from the current US$4.3 billion, CEO Julio Friedmann said in an interview. Plans include a bond sale in the first half of this year to refinance some securities.
📉 A bad day for Mexico’s stocks:
Most Latin American stock markets closed lower. Mexico’s S&P BMV/IPC (MEXBOL) dropped 2.08%, dragged down by the performance of the financial, communication services and consumer staples sectors.
Private oil companies with exploration and production contracts in Mexico failed to comply with the investments approved for 2022, according to the National Hydrocarbons Commission (CNH) with information from the Mexican Petroleum Fund.
The private sector closed the year with an investment of $1.19 billion, just 37% of the total approved by the authority presided by Agustín Díaz.
Fieldwood Energy, Italy’s Ente Nazionale Idrocarburi (ENI) and the British-Argentine consortium with Hokchi Energy accounted for 63% of the total investments made by the private sector. Servicios Múltiples de Burgos and Petrolera Cárdenas Mora closed out the top five.
🗽On Wall Street:
US stocks rallied for a third day as traders anticipate the Federal Reserve’s tightening cycle may be nearing its peak.
Earnings that trickled in after-hours dented the euphoria, with the Invesco QQQ Trust, the biggest ETF tracking the Nasdaq 100, dropping more than 1%. Amazon.com Inc., Alphabet Inc. and Apple Inc. dropped more than 3% each in late trading after reporting results. Ford Motor Co. and Starbucks Corp. also retreated after giving an update on last quarter’s performance. Qualcomm Inc. fell after delivering a disappointing sales forecast.
During Thursday’s regular trading session, the tech-heavy Nasdaq 100 (CCMPDL) was boosted by Meta Platforms Inc.’s biggest surge since 2013, fueled by the company’s earnings and upbeat outlook, and closed 3.25% higher.
The index narrowly averted stepping into a bull market from its December low, while the S&P 500 closed 1.47% higher. Both indexes rallied the most in the last three sessions since November.
Treasuries pared earlier gains, with the 10-year yield around 3.40%. A dollar index rose the most in nearly a month.
Risk assets had been bolstered since late Wednesday, when Fed Chair Jerome Powell said the central bank has made progress in its inflation battle even as labor-market data continues to show tightness that could add to wage pressures. The Labor Department will release its hiring report for January on Friday.
“Data will drive the Fed’s intent,” said Dennis DeBusschere, founder of 22V Research. “Payroll on Friday needs to confirm lower wages or internals will flip. We are still watching data.”
Investors across the globe have been cheering what they perceive as varying degrees of dovish tilts from central banks across the globe. Powell dodging a question about financial conditions easing recently fueled optimism among US investors who had been prepared for him to push back against the recent rally in risk assets.
Euphoria intensified after the Bank of England raised rates by half a point but indicated that its tightening cycle is drawing to a close. And while the European Central Bank remained somewhat hawkish, traders were heartened when President Christine Lagarde acknowledged disinflation.
“After the Fed and Bank of England both hinted at being close to the peak in their cycles, today’s meeting suggests the ECB is comfortable that it is also close to the end of its monetary tightening,” said Steve Ryder, senior portfolio manager at Aviva Investors. “We believe this peak tightening backdrop will continue to reduce volatility in government bonds over the coming months and make for an attractive income opportunity.”
Meanwhile, positioning in US swaps markets assumes the Fed is getting closer to cutting rates as traders bet that economic conditions are likely to keep it from the additional rate increases that policy makers still anticipate.
“While the Fed slowed its pace of rate hikes, there is still plenty of uncertainty on the trajectory of inflation and how its tightening of monetary policy will affect economic growth and earnings this year,” said Brad Bernstein, a Philadelphia-based managing director at UBS Wealth Management.
The Bloomberg Dollar Spot Index rose 0.4%, the euro fell 0.7% to $1.0913, the British pound fell 1.1% to $1.2236, and the Japanese yen rose 0.2% to 128.72 per dollar.
🔑 The day’s key events:
Crude oil halted its recent trend of tracking US equity market moves on Thursday. After the Federal Reserve said there is progress in the fight against inflation, investors have turned to technology stocks and others that are interest rate sensitive, leaving crude oil struggling to gain traction.
West Texas Intermediate for March delivery closed at $75.88 a barrel in New York; while Brent for April settlement settled at $82.15 a barrel after falling 0.83%.
“In general, commodities have moved lower as the growth trend resumes,” says Rebecca Babin, energy expert at CIBC Private Wealth Management. “The move in rates and the Fed’s stances have led to outflows out of commodities and energy equities into growth.”
Traders continue to wait for signs of a significant demand recovery in China, while the West Texas Intermediate futures curve continues to point to near-term oversupply.
🍝For the dinner table debate:
India’s Gautam Adani’s fortune has shrunk by $52 billion in just six trading days, a drop that is virtually unprecedented.
It is unlike that of fallen crypto star boy Sam Bankman-Fried and Bill Hwang of Archegos Capital Management, who went from having tens of billions to zero after their leveraged operations imploded.
After all, even after his empire’s stock plummeted following a report by short seller Hindenburg Research, Adani is in charge of a conglomerate that builds infrastructure that requires heavy capital infusions, such as ports and airports, all in line with Indian Prime Minister Narendra Modi’s development goals.
His wealth loss is far greater than that of Brazil’s Eike Batista, who used his commodities empire to build domestic infrastructure, such as shipyards and ports, with government support. It took Batista about a year to lose his entire US$35 billion fortune, making him the first known “negative billionaire”.
Leidys Becerra, a content producer at Bloomberg Línea, and Robert Brand of Bloomberg News, contributed to this report.