Mexico’s BMV Closes Lower As Airport Operator Shares Descend; S&P 500 Maintains Positive Ride

The Mexican BMV/IPC index headed losses in Latin America on Wednesday, while US markets maintained an upward trend, driven by tech stock hikes on the back of Netflix’s better-than-expected results

Traders work in the trading gallery of Bolsa Mexicana de Valores (BMV), Mexico's stock exchange. Photographer: Susana Gonzalez/Bloomberg
By Bloomberg Línea and Bloomberg News
July 20, 2022 | 09:41 PM

A roundup of Wednesday’s stock market results from across the region

🥇 Peru, Latin America’s leader:

The Peruvian S&P BVL Peru (SPBLPGPT led in Latin America on Wednesday, driven by the consumer staples, industrials, and financials sectors. Shares of Inretail Peru (INRETC1), Intercorp Financial Services (IFS) and Unión de Cervecerías Peruanas (BACKUSI1) drove the gains.

Brazil’s Ibovespa (IBOV) also closed higher, up 0.04%, as Rede D’or Sao Luiz (RDOR3), Alpargatas SA (ALPA4) and Totvs SA (TOTS3) shares led the gains.

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📉 Mexico, Chile head LatAm losses:

The S&P BMV/IPC (MEXBOL) and the IPSA (IPSA) were the worst performing indices in the region, the Mexican stock market falling 0.27%, with shares in two airport concessionaires falling, of Grupo Aeroportuario del Pacífico (GAPB) and Grupo Aeroportuario del Sureste (ASURB), as well as those of Monterrey-based soda bottler Arca Continental SAB (AC),

Chile’s stock market dropped 0.27%, dragged down by the consumer discretionary, materials and industrial sectors. Argentina’s Merval ((MERVAL) index shed 0.22%.

Colombia’s Colcap (COLCAP) did not trade on Wednesday due to a holiday.

🗽 On Wall Street:

US stocks rose in a volatile session Wednesday as investors parsed the latest corporate news and the potential for geopolitical risks in Europe. The dollar gained, while the euro fell as Italy’s government looked set to collapse.

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The S&P 500 posted its first back-to-back gain in almost two weeks, with advances in tech and consumer discretionary stocks offsetting declines in defensive sectors, utilities and health care. While tech stocks briefly pared their advance after Google said it will pause hiring for two weeks, Netflix (NFLX) gains on better-than-feared earnings underpinned rallies in streaming peers as well as confidence in consumers’ resilience.

The S&P 500 gained 0.59% at closing, the Dow Jones Industrials 0.15% and the Nasdaq Composite (CCMPDL) hiked 1.58%.

“Netflix earnings can be interpreted that the US consumer can be doing a little bit better than anticipated,” said Ellen Hazen, chief market strategist and portfolio manager at F.L.Putnam Investment Management.

After the bell, Tesla Inc. reported earnings that beat Wall Street estimates, reflecting progress in getting production back on track. The shares initially jumped on the news before trading little changed. Alcoa Corp. climbed after earnings topped estimates and the aluminum producer announced an additional $500 million share buyback.

Stocks advanced for third day in four amid optimism over the earnings season and growing speculation markets may have bottomed out. While that debate continues, with Sanford C. Bernstein strategists saying markets have yet to see full capitulation, rates markets have discarded bets the Federal Reserve will hike rates by a full percentage point next week, bolstering optimism the central bank will take a more measured approach to policy tightening.

The euro tumbled as Italy’s Prime Minister Mario Draghi appeared set to fall in a confidence vote after three key parties announced they wouldn’t support him.

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Oil edged lower as growing stockpiles of crude and gasoline tempered fears of a tight market. Bitcoin gained for a third straight day, rising above $24,000 for the first time in more than a month.

“The fact that companies are showing a certain resilience to the current environment is reassuring market operators who have now started betting on a less aggressive monetary tightening than initially expected,” said Pierre Veyret, a technical analyst at ActivTrades. “Even if we’re not out of the woods yet, more and more traders now tend to believe the worst is behind for equity markets this year.”

For his part, Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter, said in a note: “While I hope markets have bottomed, and I hope extreme pessimism can result in capitulation, it’s my job to point out the underlying factors behind market moves, and the bottom line is neither the economy nor corporate earnings have felt the full brunt of Fed tightening,”

🔑 The Day’s Key Events:

Oil closed lower following the U.S. Energy Information Administration’s (EIA) crude oil inventories report showd a rise in crude stockpiles at the largest storage facility in the US, in Cushing, Oklahoma.

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Gasoline stockpiles also rose more than expected last week, by 3.5 million barrels, according to the EIA, and ehile still below what they were at the same time of year in 2020, the growing stockpiles are moderating fears of a tight market. West Texas Intermediate (WTI) for September delivery settled below $100 per barrel, while Brent for September settlement was down 43 cents to close at $106.92 per barrel.

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“The EIA report was good enough to keep crude off session lows,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Management.

🍝 For the dinner table debate:

The impact of the Covid-19 pandemic on education in Latin America and the Caribbean are still being measured, and while there is no exact formula to respond to the devastating effects of the prolonged closure of schools, estimates have been made on the amount of investments and action needed to recover the sector in the region.

A report by the Inter-American Development Bank (IDB) reveals, following the onset of the pandemic, 168 million young people in Latin America lost, on average, 237 days of school, qualifying the phenomenon as a “silent crisis”, and the repercussions of which may affect an entire generation.

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The IDB estimates that 3.5 million students were out of school after the reopening of schools. In turn, the economic recovery process would be a factor that would decrease the probability of a Latin American student finishing school. For Chile, Colombia, Costa Rica, Mexico and Argentina, the IDB points out that young people could lose around 11% of their lifetime labor income due to lack of education.

The agency’s projections indicate that in the short term the resources needed for school rehabilitation and a safe return to school are estimated at US$23,087 million, or 0.21% of the regional GDP.

Leidys Becerra, a content producer for Bloomberg Línea, and Stephen Kirkland of Bloomberg News, contributed to this report