A roundup of Friday’s stock market results from across the region
👑 Peru the only LatAm stock market to close higher:
Peru’s S&P/BVL index gained 0.32% on Friday, buoyed by the shares of Minas Buenaventura SAA (BVN), Union de Cervecerias Peruanas Backus y Johnston (BACKUSI1) and Empresa Agroindustrial Pomalca (POMALCC1).
The Constitutional Court of Peru on Friday rejected the request for annulment filed by the Public Prosecutor’s Office of the National Superintendence of Customs and Tax Administration (Sunat), against the ruling that eliminates late interest on tax debts that are in dispute.
The recent ruling of the court prohibits the Peruvian state from charging default interest on tax debts involved in cases of dispute between the Peruvian state and companies. Sunat previously indicated that this decision may impact cases with more than 300 large companies that have tax debts in dispute.
📉 A bad day for LatAm’s other markets:
Chile’s Ipsa (IPSA) was the Latin American index that fell the most this Friday, closing 1.66% lower, dragged down by the performance of the industrials, real estate and non-core consumer products sectors.
None of the world’s main stock markets escapes the climate of tension. A week ago, the trigger for the fall of the world stock markets was the collapse of SVB, Signature and Silvergate; but on Wednesday it was due to the fact that the main shareholder of Credit Suisse ruled out investing more in the Swiss bank and now the focus has shifted to First Republic.
Even though the latter two were rescued, investors are still restless and this Friday First Republic’s shares collapsed again. The Chilean peso fell to the bottom of Bloomberg’s emerging and Latin American currency rankings, depreciating 3.24% against the dollar throughout the week.
🗽On Wall Street:
Technology stocks were the beneficiary of a tumultuous week for global markets as concern mounted that the turmoil rocking the banking sector will tip the global economy into recession.
The Nasdaq 100 rose 5.8% to notch its best week since November, despite a slump Friday, as investors snapped up old standby favorites in the tech sector, including Microsoft Corp. and Alphabet Inc., on bets the Federal Reserve would temper its tightening path.
“They’ve been on a strong run so far this year. Much of the stress now obviously is focused in financials. And it may be that the money has shifted into tech,” Kelly Bogdanova, a vice president and portfolio analyst at RBC Wealth Management, said in a phone interview. “If you look at the entire tech group, the valuations had come down a lot, especially in communication services. And those stocks took a hit late last year.”
The S&P 500 also carved out a 1.4% weekly gain even as banking stocks dragged the index to a 1.1% drop Friday. The financial sector was the worst performing with First Republic Bank, the latest US lender to signal stress, plunging over 70% on the week despite the larger banks throwing a lifeline to the regional lender Thursday. Credit Suisse Group AG added to the sector’s woes after Reuters reported that at least four big banks, including Deutsche Bank AG, were curbing trading with the troubled Swiss lender. A gauge of regional banks fell 15% over the past five days.
The S&P 500 closed Friday with a drop of 1.10%, the Nasdaq Composite (CCMPDL) dropped 0.74% and the Dow Jones Industrial Average slipped 1.19%.
“When an extreme event happens and impacts the financial system, it usually takes markets more than just a few days to work through it,” Bogdanova said. “We can’t rule out more knock on effects.”
The policy-sensitive two-year swung more than 20 basis points for the seventh straight session as traders recalibrated rate-hike wagers. Yields fell across the curve Friday after a softer-than-expected reading on inflation expectations. An index of the dollar weakened.
Banks including JPMorgan Chase & Co. and Citigroup Inc. banded together in a show of support for First Republic on Thursday. While the rescue attempt initially boosted sentiment, billionaire investor Bill Ackman was among those questioning whether it would be enough to halt the crisis. Meanwhile, US banks borrowed a combined $164.8 billion from two Federal Reserve backstop facilities in the most recent week, a sign of escalated funding strains in the aftermath of Silicon Valley Bank’s failure.
“The Fed’s rate hiking cycle was already feeling restrictive, so now that we have rising risks of more bank bailouts and even tighter credit standards, the growth outlook for the economy is rather bleak,” Ed Moya, a senior market analyst at Oanda, wrote. “Next week will be huge as markets are unsure if the Fed will continue to tighten or given this week’s banking turmoil decide to hold.”
Markets were also digesting a 50 basis points rate hike by the European Central Bank. By making it clear that stress points in the banking industry — as well as economic data — will guide future rate decisions, ECB Chief Christine Lagarde paved the way for bond-market gyrations to remain elevated for the remainder of the year as traders try to figure out when the hiking cycle will end.
Market pricing for the Fed’s March 21-22 meeting has lurched between another quarter-point hike, and the first rate pause in more than a year. US overnight indexed swaps are now pricing for close to a coin-flip probability of a quarter-percentage point Fed rate hike next week.
Read more: Treasury Yields Tumble in Bonds’ Seventh Straight Turbulent Day
Wall Street remains divided on which way the central bank should move. Anastasia Amoroso, chief investment strategist at iCapital, told Bloomberg Television that the confidence signaled by a 25 basis point hike from the Fed would not go “that far.”
“They have to pause,” said Amoroso. “The biggest signal of confidence would be to say, we are attuned to the issue. We want to take the time to make sure we have the right approach in place before we resume that rate hiking cycle. To me that would be the best approach.”
BlackRock Investment Institute does not expect cracks in the financial sector to deter central banks from raising rates further to contain inflation. It expects both the ECB and the Fed to “go as far as possible to distinguish their inflation fighting campaigns from measures to deal with bank troubles and safeguard the financial system,” a team of BlackRock analysts wrote in a note.
Jack Manley, global market strategist at JPMorgan Investment Management expects some kind of Fed reprieve next week and that could bring markets a “sigh of relief.”
“Financial stability is more important than inflation. And the Fed’s going to have an awfully hard time transmitting monetary policy through a banking system that it’s broken,” Manley told Bloomberg Television.
Bitcoin reached its highest level since June amid a broad rally in cryptocurrencies. Other tokens such as Ether, Solana and Polkadot surged as well. Oil had its worst week so far this year. Gold rose.
As for currencies, the Bloomberg Dollar Spot Index fell 0.3%, the euro rose 0.5% to $1.0662, the British pound rose 0.5% to $1.2170 and the Japanese yen rose 1.3% to 131.99 per dollar.
🍝 For the dinner table debate:
The International Criminal Court (ICC) issued an arrest warrant against Russian President Vladimir Putin and Maria Alekseyevna Lvova-Belova, Commissioner for Children’s Rights at the Office of the President of the Russian Federation.
Both arrest warrants are related to Russia’s invasion of Ukraine in February 2022.
However, it should be noted that in 2016 the Russian president decreed the withdrawal of his country from the Rome Statute, which governs the International Criminal Court, based in The Hague, despite the fact that in 2000 it had previously signed the statute, although without ratifying its adhesion.
For its part, Ukraine is also not a party to the Statute, but has recognized the ICC’s authority to investigate conflicts in its territory since 2013.
The Russian president is accused of being “allegedly responsible for the war crime of illegal deportation of population (children) and illegal transfer of population (children) from the occupied areas of Ukraine to the Russian Federation,” says the ICC in its official statement.
Leidys Becerra, a content producer at Bloomberg Línea, and Carly Wanna and Angel Adegbesan of Bloomberg News, contributed to this report.