Peru Leads LatAm Gains; US Markets Close Lower As Apple Dampens Optimism

Chile and Mexico’s markets were the only ones in Latin America to close lower on Monday, while in the US, Apple’s hiring and spending slowdown put the brakes on market optimism

The Apple logo outside the flagship store in New York, U.S., Photographer: Gabby Jones/Bloomberg
By Bloomberg Línea and Bloomberg News
July 18, 2022 | 06:50 PM

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

🥇 Peru, Latin America’s leader:

Latin American stock markets rebounded amid lower risk aversion on Monday following increases in the prices of the main commodities and the weakness with which the dollar started the week.

The Peruvian market was the best performer in the region, with the S&P BVL Peru (SPBLPGPT) rising more than 2%.

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The financials, materials, and consumer staples sectors led the session’s performance. Shares of Volcan Cia Minera (VOLCABC1), Sociedad Minera Cerro Verde (CVERDEC1), and Minsur (MINSURI1) had a good day.

The Brazilian stock market also caught the rally and the Ibovespa (IBOV) closed with gains, boosted by stocks linked to iron ore and oil.

📉 A Bad Day:

The Mexican stock market bucked the positive trend in Latin America and, together with Chile’s IPSA (IPSA).

The S&P BMV/IPC (MEXBOL) fell by 0.32%, dragged down by the performance of the consumer staples, materials and finance sectors.

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Caution among investors continues with the delivery of reports corresponding to the second quarter of the year.

This week, companies such as conglomerate Alfa (ALFAA), Bimbo (BIMBOA), Gruma (GRUMAB), Kimberly-Clark Mexico (KIMBERA), Volaris (VOLARA) and Arca Continental (AC*), among others, will present their second quarter results.

Reporting season was kicked off by América Móvil (AMXL), the Latin American telecommunications giant and one of the companies with the biggest weight on the index.

🗽 On Wall Street:

Apple Inc.’s (AAPL) announcement to slow hiring and expenditure next year has put the brakes on optimism in US markets, and which followed the quarterly results of the main banks.

The country’s largest company by market capitalization will slow hiring and spending growth next year in some divisions to cope with a possible economic downturn, three sources told Bloomberg News.

The decision renewed worries among investors awaiting the Federal Reserve’s meeting later this month amid fears that monetary policy will lead to a recession.

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The S&P 500 dropped 0.84%, the Dow Jones Industrial lost 0.69% and the Nasdaq Composite (CCMPDL) closed 0.81% lower on Monday.

Apple’s announcement follows that of Alphabet (GOOGL) earlier this month, while the market is also awaiting the quarterly results of Netflix (NFLX), which will be published Tuesday.

Treasuries retreated but the 10-year yield only briefly topped 3%. That suggests buyers see value at such levels amid troubling economic prospects and expectations for a short, sharp Federal Reserve interest-rate hiking cycle that gives way to cuts next year.

Copper, iron ore and oil rebounded. Crude pared some gains, but remained above $100 a barrel, where according to Iraq’s energy minister it will stay for the rest of the year. Bitcoin rallied past $22,000 but later pared some of the move.

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Investors are scouring corporate updates such as Apple’s to calibrate the risk of a global economic retrenchment. Signs that high inflation and monetary tightening are squeezing consumers and employment could feed into worries that a climb in stocks since mid-June is just a brief bear-market bounce.

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“We’re in a period over the next couple of weeks where corporate headlines are really going to drive market activity,” Anthony Saglimbene, global market strategist at Ameriprise Financial Inc., said on Bloomberg Television. The focus is on how labor and input costs and demand are shaping the outlook, he said.

In China, officials may allow homeowners to temporarily halt mortgage payments on stalled property projects without incurring penalties. Authorities are racing to prevent a crisis of confidence in the housing market from upending the world’s second-largest economy.

Another pressure point for markets remains gas supply to Europe amid a standoff with Russia over its invasion of Ukraine, with the Nord Stream 1 pipeline scheduled to reopen Thursday following maintenance.

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Gazprom PJSC declared force majeure on several European natural-gas buyers, a move that may signal it intends to keep supplies capped.

The volatility in global markets overall is from efforts “to gauge whether we are seeing, one, peak inflation and two, peak interest rates,” Lale Akoner, strategist at BNY Mellon Investment Management, said on Bloomberg Television, adding she expects the US dollar to remain higher for the next six months.

In foreign exchange, The euro was at $1.0145, the Japanese yen at 138.14 per US dollar and the offshore yuan was at 6.7601 per dollar.

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🔑 The Day’s Key Events:

Oil prices continued the rally they ended last week with WTI and Brent benchmarks returning to $100 per barrel levels.

Prices, which benefited from the optimism generated by last week’s US retail sales report, were boosted after the Saudis refused to make promises on future production increases, Bloomberg reported.

Saudi ministers insisted at the conclusion of President Joe Biden’s visit last week that oil policy decisions would be dictated by market logic and the agreement of OPEC and its allies.

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In addition, Iraq’s oil minister, Ihsan Abdul Jabbar, told Bloomberg that he expects oil prices to exceed $100 per barrel for the rest of the year.

The cryptocurrency market also started the week with a rally after risk aversion among investors returned.

Bitcoin (XBT) was trading above US$21,600, although there are still doubts as to whether it will fall again.

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🍝 For the Dinner Table Debate:

Ecuador’s President Guillermo Lasso spoke to Bloomberg Línea about what is coming for the country after the 18-day strike and the Indigenous protests in June, which practically paralyzed the country and led the National Assembly to vote for an impeachment that ultimately failed.

In the conversation, the Ecuadorian president pointed directly to former president Rafael Correa as the driving force behind the protests against his government because “he is desperate to return to Ecuador to achieve his own impunity”.

He added that he does not feel alone in power and that in the midst of the worst of the protest he did not think of stepping aside.

The president also referred to the agreements with the International Monetary Fund and said that he will go ahead with plans to reduce the deficit and implement the agreed reforms. He also talked about the country’s movements toward free trade deals.

-- Carlos Rodríguez Salcedo, a content producer for Bloomberg Línea, and Sunil Jagtiani of Bloomberg News, contributed to this report