A roundup of Friday’s stock market results from across the Americas
👑 Peru leads in Latin America:
Latin American stock markets closed Friday with gains, influenced by the good mood in which the US markets ended the day, with the S&P/BVL Peru (SPBLPGPT) and Colombia’s Colcap (COLCAP) posting the highest gains in the region.
Peru’s index posted a gain of 4.24%, driven by the performance of the materials, financials and industrials sectors. The materials sector led the Peruvian stock market’s performance with a 7.26% increase. The shares of Southern Copper Corporation (SCCO), Compañía de Minas Buenaventura (BVN) and mining company San Ignacio de Morococha (MOROCOI1) registered the highest gains.
Mining and metallurgical stocks, in general, rose on Friday after news that China is evaluating the easing of its Covid-19 restrictions. On the other hand, metals advanced boosted by employment data in the United States. Southern Copper shares, for example, beat analysts’ 12-month average price target of US$50.26. Shares are now at US$53.70, the highest closing level since June 21, 2022.
It should be noted that Minas Buenaventura put announced this week that it has already started construction of the San Gabriel gold and silver mine after reaching an agreement with the government and communities. The works had been paralyzed in June.
The Colcap gained 2.36%, driven by the energy, utilities and consumer staples sectors. Shares of Canacol Energy (CNEC), Interconexión Eléctrica (ISA), and Mineros SA (MINEROS) were the strongest on the day. ISA reported a third quarter net profit of 668.03 billion pesos, up from 121.37 billion in Q3 2021.
In Colombia, Congress approved ambitious tax increases on fossil fuels and millionaires. Lawmakers gave the green light to a tax package that will take effect as of January 1 and with which the government expects to generate additional annual revenues of about US$4 billion, equivalent to about 1.4% of the country’s Gross Domestic Product.
Colombia’s bonds, stock market and currency have plunged in recent weeks amid uncertainty about the government’s policies. Investors are likely to welcome the increased revenues brought by the bill, although many are concerned that the sharp increase in taxes for the oil sector may discourage investment.
After the approval, Finance Minister José Antonio Ocampo told legislators that the bill shows that the government has a “solid” fiscal policy. Ocampo has repeatedly said that he is committed to macroeconomic stability.
🗽 On Wall Street:
US stocks rose on Friday, with traders weighing mixed jobs figures and awaiting next week’s inflation data for more clues on when the Federal Reserve would be able slow down its pace of rate hikes.
The S&P 500 halted a four-day slide. The dollar slumped the most since March 2020. Two-year US yields, which are more sensitive to imminent policy moves, reversed course and came down.
The S&P 500 closed 1.36% higher thanks to gains in the raw materials, financial and industrial sectors, which beat the performance of the tech sector. Tesla Inc. (TSLA) shares fell almost 4% and Apple Inc. (AAPL) shares closed lower for their fifth consecutive session.
The Dow Jones Industrial Average and the Nasdaq Composite (CCMPDL) also closed lower, down 1.26% and 1.28% respectively.
Fed fund futures are leaning toward pricing a 50-basis-point hike in December, with the peak around 5.1% next year. Officials this week raised rates by 75 basis points for the fourth straight time, lifting their benchmark to a target range of 3.75% to 4%.
Wall Street’s fear gauge is well below the panic levels seen during the pandemic or the 2008 crisis, but volatility is very much a feature of 2022.
The S&P 500 has already seen five monthly moves this year in excess of 7%, either to the upside or downside. Beyond the tumult of the 2008 global financial crisis, one must go back to 1933 -- the days of the Great Depression -- to see more swings of such magnitude in a single year.
“This week is a reminder that the intense volatility and emotional trading experience through much of the year is likely to continue,” said Mark Hackett, chief of investment research at Nationwide. “Bottoming processes are rarely clean, and even if bulls are gaining control, pockets of weakness are inevitable.”
Markets will watch the latest US inflation reading on Thursday after the core consumer price index rose more than forecast to a 40-year high in September. Even if prices begin to moderate, the CPI is far above the Fed’s comfort zone.
Regarding the jobs report, Chris Senyek at Wolfe Research, said: “This report does nothing to change the Fed’s ‘higher for longer’ narrative. We probably won’t see really weak jobs numbers until the US economy is already in a relatively deep recession.”
For his part, Jason Pride at Glenmede, said the report “likely does not push the Fed off its path for a 50-75 bp rate hike in December. However, the next big economic report that could move the needle for the Fed is next week’s CPI report”.
Investors are fleeing to the safety of cash funds as the Fed remains firmly hawkish, according to strategists at Bank of America Corp.
The asset class had inflows of $62.1 billion in the week through Nov. 2, according to a note from the bank citing EPFR Global data. That’s contributed to $194 billion of inflows into cash from the start of October -- the fastest start to a quarter since 2020.
In corporate news, US-listed Chinese stocks jumped amid fresh optimism over an easing of Covid restrictions. DoorDash Inc. reported revenue that beat estimates, a sign that customers are still ordering pricey takeout despite a squeeze from higher inflation.
On the currency markets, the Bloomberg Dollar Spot Index fell 1.7%, the euro rose 2.2% to $0.9960, the British pound rose 1.9% to $1.1373 and the Japanese yen rose 1.1% to 146.70 per dollar.
🔑 The day’s key events:
Oil prices rose Friday on speculation that China, the world’s biggest crude importer, is seeking to ease restrictions on its Covid Zero initiative and is evaluating removing a measure that penalizes airlines that bring passengers who test positive for the virus into the country.
As reported by Bloomberg, China’s State Council recently asked government agencies, including the civil aviation regulator, to prepare to end the mechanism, said sources who asked not to be identified because the matter is sensitive.
The Covid Zero strategy has weighed on the Chinese economy and just because of its restrictions, analysts at Bank of China International have said the country’s oil demand in 2022 is forecast to fall by 400,000 barrels per day.
West Texas Intermediate (WTI) for December delivery ended the day up 5.04% to settle above $92; while Brent for January settlement closed with a gain of more than 4% at $98.74 per barrel, marking a third consecutive weekly rise for oil.
“With China relaxing some Covid-19 restrictions, especially for air travel, most traders are taking the news as a positive boost for demand in the near future,” Dennis Kissler, senior vice president at Bok Financial Securities, told Bloomberg.
🍝 For the dinner table debate:
Twitter Inc (TWTR) has been sued by workers over plans by new owner Elon Musk to cut some 3,700 jobs at the social networking company without sufficient notice.
Employees say the layoffs are already taking place and that the lack of notice violates U.S. federal and California state laws.
A San Francisco court on Thursday received a class-action lawsuit in this regard.
Twitter will begin making layoffs this Friday, the company said in an email to employees. Musk intends to cut half of the company’s positions, in line with his plan to cut costs following his $44 billion acquisition of the social network, people familiar with the matter said.
At the heart of the issue is the fact that the federal Worker Adjustment and Retraining Notification (WARN) law restricts large companies from conducting mass layoffs without giving at least 60 days’ notice.
Leidys Becerra, a content producers at Bloomberg Línea, and Rita Nazareth of Bloomberg News, contributed to this report.