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Tech Stocks Torpedo Nasdaq; Peru Posts LatAm’s Sharpest Fall

Oil prices fall as the U.S. offers to sell up to 40 million barrels to alleviate the supply shortage

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May 24, 2022 | 06:50 pm

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

🗽 On Wall Street:

U.S. stocks trimmed their losses during Tuesday’s session but still ended the day in the red. Tech led the decline, with shares of Snap Inc (SNAP) tumbling amid the company’s warning that it will miss earlier revenue and earnings forecasts.

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“At this point, our sense is that this is more macro and industry-driven rather than Snap-specific,” Piper Sandler analyst Tom Champion wrote in a note, referring to the sector’s negative juncture.

The Snapchat owner plunged more than 40%, leading losses among companies that rely on digital advertising.

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The S&P 500 closed down 0.81%, while the Nasdaq Composite (CCMPDL) slid 2.35%, but the Dow Jones managed to climb a modest 0.15%.

“The market is shifting its attention - and has done so over the last month - from inflation concerns to growth concerns,” Ellen Hazen, chief market strategist at FL Putnam, told Bloomberg.

🔑 The Day’s Key Movements:

Oil closed lower for a second straight day after the U.S. Department of Energy announced an offer to sell up to 40.1 million barrels of crude as part of President Joe Biden’s pledge to release one million barrels a day for six months to ease the supply crisis.

West Texas Intermediate futures closed just below $110 a barrel, the lowest level in almost a week, after the department of energy said it would release up to 39 million barrels of sour or bitter crude for supply from July 1 to August 15, according to a statement accessed by Bloomberg.

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The remaining 1.1 million would be sweet crude for supply between June 21 and June 30.

“Oil moves have become more subdued,” said Alex Kuptsikevich, senior market analyst at FxPro. “It will take significant, upward momentum for prices to manage to consolidate above this area this time.”

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🥇 Latin America’s Leader:

Argentina’s Merval (MERVAL) was the best performing index in the region, gaining 1.03%.

Lithium played a starring role in Argentina’s business discussions on Tuesday. At a luncheon held in Buenos Aires that brought together 400 mining executives and government officials, the attractiveness of Argentine lithium for investors was highlighted in view of the imminent shortage of the key raw material for batteries used in electric vehicles.

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Chinese and U.S. companies have been engaged in a bidding war for Argentina’s lithium resources, while Rio Tinto Group and Zijin Mining Group Co. are investing more than $1 billion in the country.

Chile’s Ipsa (IPSA) also closed with gains for the second consecutive day. The Chilean stock market, which closed up 0.30%, was boosted by the industrial, finance and consumer staples sectors.

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In Chile, lithium is also the talk of the town. The government is preparing a state-owned company to lead a green lithium strategy, in which it would assume a majority participation in future projects, and will consult with a group of experts to decide the structure of the company, which could be a subsidiary of an existing state operator, such as copper miner Codelco, or it could incorporate private groups as minority shareholders.

📉 A Bad Day:

The S&P BVL/Peru (SPBLPGPT) closed with the sharpest fall in the region, down 0.38%, dragged down by the materials, consumer staples and financial sectors.

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The S&P BMV/IPC (MEXBOL) also registered losses, closing down 0.14%, as shares in the real estate, materials and industrial sectors had the weakest performance.

🍝 For the Dinner Table Debate:

Over the past three years, the fintech industry in Latin America has doubled in size and has become the sector that has attracted the most investment from venture capital in the technology sector, according to a report by the Inter-American Development Bank (IDB) and Finnovista.

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With this trend, fintech companies now have their sights set on scaling the size of their operations in an environment where authorities are beginning to push for regulations to govern the sector.

The growth that has occurred in the last three years has taken place mostly in the region’s two main economies: between 2018 and 2021, the number of companies rose by 31% in Brazil, while in Mexico the increase was 21%. The increased supply, according to the IDB, has been accompanied by more alliances between traditional financial institutions and the emergence of digital banks.

This trend is not unique to Latin America. At least up to the third quarter of last year, according to Boston Consulting Group, investment in financial startups was 90% higher than during all of 2020, totaling $34.4 billion worldwide.