Mexico’s and Chile’s Stock Markets Close Lower, In Line With Wall Street

Brazil and Colombia’s markets closed higher, while production price rises pushed US stocks lower on Friday

The New York Stock Exchange (NYSE).
By Bloomberg Línea
December 09, 2022 | 09:21 PM

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

👑 Colombia’s Colcap leads in Latin America:

Latin American stock markets closed mixed on Friday. Colombia’s Colcap (COLCAP) gained 0.53% driven by financial sector stocks, with Banco Davivienda S.A. (PFDAVVND) rallying 3.83%.

The Colombian Stock Exchange (BVC) equity market has 15 trading days left to erase the losses of the MSCI Colcap index. Trading volumes are decreasing as the year ends and in the accumulated balance the picture shows that the Market Capitalization index is falling by more than 12.8%. If the trend does not change, the Colombian market will accumulate its third year of devaluation.

Brazil’s Ibovespa (IBOV) trimmed part of the week’s losses and advanced 0.25%, driven by the shares of mining and steel companies.


On Friday, President-elect Lula da Silva tested the markets and ratified Fernando Haddad as his finance minister. One of his key missions will be to negotiate proposals that have generated friction with Congress, including an overhaul of the tax system and new spending laws that should address growing social demands without damaging fiscal credibility.

VIEW +Who is Fernando Haddad, Brazil’s Incoming Finance Minister?

The markets of Argentina and Peru remained closed due to holidays.

📉 A bad day for Mexico’s BMV:

Meanwhile, the S&P/BMV IPC (MEXBOL) closed the day down 1.20%, following a poor performance by financial and industrial shares. Grupo Aeroportuario del Centro (OMAB) and Grupo Televisa S.A. (TLEVICPO) shares fell 3.64% and 2.93%, respectively.


Mexican cement giant Cemex received a credit rating upgrade from S&P Global Ratings, which brings it closer to recovering the investment grade rating it lost more than a decade ago. Cemex’s (CEMEXCPO)) global rating was upgraded from ‘BB’ to ‘BB+’, from second to first speculative grade, in response to the company’s efforts to reduce its indebtedness and its greater financial flexibility, S&P said in a statement.

Chile’s Ipsa (IPSA) lost only 0.20% at the close on Friday.

🗽 On Wall Street:

Stock traders took risk off the table at the end of a week that saw recession fears resurface and a hotter-than-estimated inflation print with the Federal Reserve decision just around the corner.

A late-day slide in equities shattered the calm that prevailed throughout most of the trading session, with the S&P 500 closing near Friday’s lows. The Dow Jones Industrial Average notched its worst weekly drop since September. Treasury 10-year yields climbed, approaching 3.6%.

The Dow Jones Industrial Average dropped 0.90%, the S&P 500 0.74% and the Nasdaq Composite (CCMPDL) 0.70%.

In the run-up to the Fed meeting, all eyes will be on Tuesday’s consumer inflation data — which is forecast to show prices, while much too high, continued to decelerate. Swaps signaled bets policymakers will raise rates by 50 basis points Wednesday after four straight 75 basis-point hikes. Officials including Chair Jerome Powell have been indicating a downshift, while stressing borrowing costs will need to remain restrictive for some time to beat inflation.

“Bottom line: the Fed has already come to terms with the fact that they are likely risking a recession, to anchor inflation longer-term,” said Don Rissmiller at Strategas. “The job is not done. Rate hikes can likely slow down to 50 bp, but we are still looking at policy tightening (and staying tight) in 2023.”


Financial conditions have eased dramatically since the October consumer-price reading, so the Fed will likely use the December meeting to walk those back, according to Cliff Hodge at Cornerstone Wealth. The most straightforward way to do so would be the Summary of Economic Projections — specifically the so-called dot plot, he noted.

“We think the markets are too sanguine on rates after the first quarter, and we expect Powell to take a more hawkish tone and for the dots to indicate higher rates for a longer period of time than what is currently being priced in by the futures markets,” Hodge said. “A ‘hawkish’ step-down so to say.”

The Fed is set to keep rates at their peak throughout 2023, dashing hopes markets have priced in for rate cuts in the second half, according to economists surveyed by Bloomberg.

The Federal Open Market Committee’s median projection is expected to show the benchmark peaking at 4.9% in 2023 — reflecting a 4.75%-5% target range — compared to 4.6% seen in September. That would deliver a hawkish surprise to investors — who currently bet rates will be cut by a half percentage point in the second half of next year, though they too see rates peaking around 4.9%. The current range is between 3.75% and 4%.


While many investors are impatient for the Fed to deliver its last rate hike, history shows they should be wary of doing so while inflation remains elevated, according to Bank of America Corp. strategists.

An analysis by Michael Hartnett showed that stocks outperformed after the Fed stopped increasing rates during periods of disinflation in the past 30 years. However, during the era of high inflation in the 1970s and 1980s, equities had fallen after the last hike, they wrote. In the current cycle, they expect the Fed to raise rates for the last time in March 2023.

After analyzing 15 economic downturns going back to 1929, strategists at Bloomberg Intelligence found a strong link between the length of recessions and the time it took the S&P 500 to reclaim its previous high.


In all instances, it’s taken the gauge about 386 days to reach the bottom and 573 days to recover to peak levels. But if the bottoming process took longer than average, the road to reclaim a previous peak has then lasted 1,997 days, six times the length of the ascents that came after a quicker-than-average bottoming process.

Stocks might be on track for their worst returns since the global financial crisis, but the market has endured the most daily routs in almost five decades, according to data compiled by Bloomberg as of Wednesday’s close. Those selloffs are calculated by a so-called hit ratio that measures the number of gains versus losses as a percentage of the total number of trading days.

That ratio stands at 43%, the S&P 500′s lowest since 1974. An annual hit ratio lower than 50% has only been seen 10 other times in the past 48 years, and the recovery has been painfully slow in most cases


Still, some of the world’s biggest investors predict that stocks will see low double-digit gains next year. Seventy one percent of respondents in a Bloomberg News survey expect equities to rise, versus 19% forecasting declines. For those seeing gains, the average response was a 10% return.

On the currency markets, the Bloomberg Dollar Spot Index rose 0.1%, the euro fell 0.2% to $1.0530, the British pound rose 0.2% to $1.2255 and the Japanese yen was little changed at 136.71 per dollar.

🔑 The day’s key events:

Crude oil closed Friday its worst week since April 2022, despite Friday’s gains driven by the reactivation of some pipelines that allayed fears of a supply shortage. TC Energy Corp. plans to restart a section of the Keystone pipeline closed since Saturday after a 14,000-barrel oil spill.


Benchmark WTI fell 0.62% to $71.02 per barrel, while benchmark Brent rose 0.88% to $76.82. The brief rebound in WTI was explained by the possible production cut that Russia would make in the face of the European Union’s price cap.

“Crude oil can’t find a bid as Keystone looks to come back online before long. For now, every headline is viewed through a bearish lens and buyers are not motivated to get involved until they see demand signals improve,” explained Rebecca Babin, senior energy trader at CIBC Private Wealth Management.

Crude is headed for its first consecutive quarterly decline since mid-2019 due to a sour economic outlook as central banks tighten monetary policy, Bloomberg said.


🍝 For the dinner table debate:

An economist who accurately predicted the winners of the 2014 and 2018 World Cup tournaments says England will reach the Qatar 2022 final on December 18, but will lose to Argentina.

Joachim Klement, an economist and investment analyst at Liberum Capital, stands by his prediction made in September, prior to the start of the FIFA Qatar 2022 World Cup, even though he “sweated a lot” watching Saudi Arabia beat Argentina in the group stage of the tournament in Qatar.

In order to predict the winners, he uses a method based on four elements: climate, population size, GDP per capita and culture. The best performers are the warmest countries, which can play soccer year-round, have a large population, high GDP per capita and a population that is passionate about soccer.


In his model, the three countries that are outliers are India, China and the Netherlands.

“India has gone for cricket, God knows why, and China, for some strange reason, has taken a liking to it,” Klement explained to Bloomberg TV. The Netherlands has had “great success in soccer,” considering its comparatively small population, he added.

VIEW +Qatar 2022: Who Will Win the World Cup According to a Successful Economic Model?

Sebastián Osorio Idárraga, a content producer at Bloomberg Línea, and Rita Nazareth of Bloomberg News, contributed to this report.