Oil Surpasses $120 on Memorial Day Holiday; Peru’s Market Leads LatAm Gains

Oil prices rose on Monday, with the Brent benchmark breaking through the $120-per-barrel barrier as China eases lockdowns

Pump jacks extract oil in Yoakum County, Texas, U.S. Photographer: Matthew Busch/Bloomberg
May 30, 2022 | 05:40 PM

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

🗽 On Wall Street:

U.S. stock markets remained closed on Monday for Memorial Day, but investors closely followed the new news regarding inflation and interest rate hikes.

On the one hand, on Tuesday a meeting is scheduled between President Joe Biden and Federal Reserve chairman Jerome Powell to discuss the state of the U.S. and global economy, according to a White House statement.

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Data released Friday revealed that the Fed’s preferred gauge of price pressures, the personal consumption expenditures price index, rose 6.3% last month compared with April 2021, more than triple the central bank’s 2% target.

Amid the battle against the rising cost of living, Fed governor Christopher Waller assured that he wants to keep raising interest rates in half-percentage-point increments.

“I support tightening monetary policy by another 50 basis points over several meetings,” he said in remarks prepared for delivery Monday in Frankfurt.

Stock futures advanced, which could indicate that the gains with which they ended last week could continue on Tuesday once trading resumes.

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🔑 The Day’s Key Movements:

Oil prices rose with the Brent benchmark surpassing US$120 in Monday’s trading after China relaxed measures imposed to curb the spread of Covid-19, and European Union (EU) countries advanced in an agreement to ban imports of crude oil from Russia.

Chinese President Xi Jinping’s government lifted confinement measures in Shanghai for residents in low-risk areas, allowing them to freely leave and enter their residential compounds from Wednesday.

Restrictions on movement in several districts began to loosen after authorities said the outbreak was under control and announced a package of economic measures to deal with the effects of the confinement in the world’s top oil importer.

Prices also received a boost from negotiations by European Union leaders to push through a possible agreement in June on a sixth package of sanctions against Moscow over its invasion of Ukraine.

The sanctions proposal would halt imports by sea early next year, while pipeline supplies would be banned only once the concerns of several landlocked countries are satisfied, according to people familiar with the talks, Bloomberg reported.

Hungary has so far refused to back a concession despite proposals aimed at securing its Russian oil supplies. EU sanctions require the backing of all member states.

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🥇 Latin America’s Leader:

The Peruvian stock market led a day without much movement in Latin America, and during the holiday in the United States. The S&P/BVL Peru (SPBLPGPT) had the best performance on the day, gaining a nominal 0.59%, boosted by the consumer staples, industrial and raw materials sectors.

Shares of BBVA Peru (BBVAC1), Alicorp (ALICORC1) and Volcan Cia Minera (VOLCABC1) were among the session’s best performers.

The Colombian stock exchange remained closed Monday for a holiday.

📉 A Bad Day:

On a day of low liquidity, marked by the U.S. holiday, the Brazilian stock exchange had the worst performance of the session.

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Although it started the day with gains, the Ibovespa (IBOV) closed with a fall of more than 0.80%, adversely affected by the shares of Petrobras (PETR3; PETR4).

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Although oil prices rose, investors are still resenting the change in the company’s management, after President Jair Bolsonaro fired José Mauro Ferreira Coelho, who had taken office just over a month ago.

The S&P BMV/IPC (MEXBOL) closed with a drop of 0.57%, with the sharpest declines seen by shares in the communication services, finance and non-core consumer goods sectors.

🍝 For the Dinner Table Debate:

Fans of English soccer club Chelsea FC gained some peace of mind, following weeks of uncertainty after Russia’s Roman Abramovich was forced to sell the English club as a result of UK sanctions following Russia’s invasion of Ukraine.

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Monday saw the completion of the takeover of the team by U.S. investor Todd Boehly, who will pay £4.25 billion (US$5.4 billion) for the club.

Boehly beat off competition from rival consortiums led by British businessman Martin Broughton and Bain Capital co-chairman Stephen Pagliuca.

Boehly’s winning bid was backed by California-based private equity firm Clearlake Capital. It includes a £2.5 billion share buyout and £1.75 billion for future investment for the benefit of the club. The offer was signed by the English Premier League and the UK government last week.

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“We are all-in, 100 percent, every minute of every game,” Boehly said in a separate statement.

“Along with our commitment to developing the youth team and acquiring the best talent, our action plan is to invest in the club for the long term and build on Chelsea’s remarkable history of success,” he said.