:quality(75)/cloudfront-us-east-1.images.arcpublishing.com/bloomberglinea/WX7IZ4PWSFFPJD3ILRQHVSTFPI.jpg "Inicia el segundo semestre del año")
A roundup of Wednesday’s stock market results from across the region
👑 Latin America’s Leader:
The market rebound in the United States spread to practically all Latin American stock markets on Wednesday, and Argentina’s stock market once again recorded the best performance for the second consecutive day.
The Merval index (MERVAL) rebounded more than 2.5% thanks to the performance of Loma Negra (LOMA), Sociedad Comercial del Plata (COME) and Central Puerto (CEPU) shares.
The market continues to pay attention to the changes in the Argentine Economy Ministry and the impact it could have on the agreement with the International Monetary Fund (IMF).
IMF head Kristalina Georgieva told Reuters on Wednesday that Argentina’s new Economy Minister, Silvina Batakis, “was committed to the objectives of the program” of the country with the organization, and that she would “work constructively with the Fund to achieve these objectives”.
Georgieva further stated that she would underline the IMF’s desire to continue to support Argentina when she spoke with Batakis on Wednesday. Under the agreement negotiated by former economy minister Martín Guzmán, Argentina will have to repay the IMF more than $45 billion between 2025 and 2034.
The Mexican and Brazilian stock exchanges also closed with gains, the S&P BMV/IPC (MEXBOL) climbing 0.46%, while Brazil’s Ibovespa (IBOV) rebounded 0.43% after Tuesday’s fall.
📉 A Bad Day:
Peru’s stock exchange was the only one in the region to register losses, as the market continues to be hit by the fall in the prices of raw materials, especially copper, one of the country’s main sources of income.
The raw materials, industrial and financial sectors showed the worst performance.
During the day, the shares of Minsur (MINSURI1), Trevali Mining (TV) and Aenza (AENZAC1) were among the worst performers.
On the other hand, during the day, the Ministry of Agrarian Development and Irrigation advanced plans for the acquisition of fertilizers and reiterated that they will arrive in mid-August, as promised by the head of the portfolio, Andrés Alencastre, at the end of June.
“They will arrive in a timely manner,” said César Santisteban, director of Statistics at Midagri, during the presentation of the National Sowing Intention Survey for the 2022-2023 season.
🗽 On Wall Street:
US stocks rose for the third straight day on Wednesday as investors parsed economic data that hinted at slightly slower growth, prompting some to brush off the hawkish stance that the Federal Reserve reiterated in its June meeting minutes as outdated.
The S&P 500 ended the session up 0.4% after swinging between gains and losses as investors digested a flurry of data. The Nasdaq Composite (CCMPDL) gained 0.35%.
The two- and 10-year US Treasury yield curve remained inverted. The dollar held onto its gains. Oil fell below $100 a barrel, extending its drop for a second day.
All eyes were on the Fed as it revealed details of its June meeting on Wednesday afternoon. Fed officials agreed last month that interest rates may need to keep rising for longer to prevent higher inflation from becoming entrenched, even if that slowed the US economy, the minutes showed. But traders on Wednesday also grappled with economic data which pointed to a slight deceleration in the pace of growth, spurring some to conclude that the Fed’s minutes don’t reflect the current reality of the economy.
Since the last Fed meeting, “the economic data, the inflation data and the bond market response has turned much more dovish,” said Jim Paulsen, chief investment strategist at chief investment strategist at the Leuthold Group.
“All of that is suggesting that really what the Fed thought 30 days ago is not that meaningful at the moment.”
Data released Wednesday showed that US job openings dipped slightly in May but remained near a record, pointing to resilient demand for labor even as optimism about the economy’s prospects dim. Growth in the US services sector also eased in June to a more than two-year low as orders softened amid ongoing hiring challenges and capacity constraints.
But not all investors are convinced that the Fed’s reiterated stance has little bearing on what’s to come.
“Indeed, the minutes reflected a Fed that is concerned about inflation, and even though they believe that inflation could stay high for a while and growth risks are skewed to the downside, they talk about the potential of an even more restrictive policy in time,” said Priya Misra, global head of rates strategy at TD Securities. “This is hawkish relative to a market that has increasingly become convinced that the Fed is about to blink on hikes due to an imminent recession.”
Despite recent fluctuations in the stock market, volatility is still far off levels usually observed during other powerful bear markets. The Cboe VIX Index hasn’t crossed the 40 points mark since the latest selloff began, something unseen over the past two decades.
Bond traders are penciling in a policy turnaround by the Federal Reserve, with current hawkishness giving way to interest-rate cuts in the middle of 2023. Some investors saw additional hints of this in the Fed’s minutes.
“What got my attention was the reference to a potential pause at year-end,” said Cliff Hodge, chief investment officer at Cornerstone Wealth. “This is new, and extremely important. They were already thinking about where the appropriate level is to stop tightening policy in June, before the spate of economic data really deteriorated.”
Central banks around the world have been tightening monetary policy to contain consumer prices. But a renewed spike in China’s Covid cases and a worsening gas crisis in Europe are signals that a worldwide slowdown is on the horizon despite these efforts.
Bitcoin fell again, wobbling around the $20,000 level.
🔑 The Day’s Key Events:
Oil prices continue to fall and the benchmark WTI remains below $100 as investors remain concerned about the possibility of an economic downturn impacting demand for crude oil.
Ed Morse, a Citigroup Inc. analyst, said the outlook for oil demand will likely see further downward revisions amid higher fuel prices.
“Almost everyone has lowered their demand expectations for the year,” Morse said in an interview with Bloomberg Television on Wednesday.
However, the outlook for the market remains good. China, the biggest oil importer, has seen a surge in fuel demand as the country has relaxed strict conditions against Covid-19.
Overall gasoline and diesel consumption last month was at nearly 90% of June 2019 levels, Bloomberg reported.
🍝 For the Dinner Table Debate:
The last line of defense for bitcoin (XBT) appears to be among its most loyal investors, according to an analysis by Glassnode, which highlighted that, as the price has been falling, most investors have moved their money away from the world of cryptocurrencies.
A report from the blockchain data analytics company warned that amid the current bear market, which even coincides with the worst times of 2018 and 2019, bitcoin has seen an almost complete purge of so-called ‘market tourists’.
These contrast with long-term investors, also known in crypto jargon as ‘hodlers’ or ‘diamond hands’, a reference to their not shaking a pulse when it comes to riding through steep market declines. Members of this group have maintained their positions despite the fall that has occurred since the start of 2022.
According to Glassnode’s analysis, the activity seen in the crypto asset market coincides with very low demand and interest, typical of bear markets.
Estimates indicate that address activity (a kind of ID that enables transactions) has fallen by 13%: from over one million per day in November 2021 to around 870,000 per day currently.
-- Carlos Rodríguez Salcedo, a content producer for Bloomberg Línea, and Isabelle Lee and Elaine Chen of Bloomberg News, contributed to this report
