A roundup of the stock market results from across the region on Monday
🗽 On Wall Street:
In a volatile session, U.S. stock markets began the week with losses on Monday, following a sell-off in technology stocks in the last hours of the session.
The S&P 500 (SPX) lost 0.37%, while the Dow Jones Industrial (INDU) remained stable. The Nasdaq Composite (CCMPDL) fell 0.58%.
Investors remain in anticipation of monetary policy tightening by the Federal Reserve, which could make as many as five interest rate hikes this year. Bets on tougher talk from the U.S. central bank rose following last week’s jobs report.
In addition, eyes will be on U.S. inflation data due out this week that could reveal a rise of more than 7%, the highest since the early 1980s.
“U.S. stocks will struggle to find direction until inflation tips market expectations, in terms of Fed hawkishness in what is still considered an overvalued market. Wall Street saw pressure with selling in tech stocks,” wrote Edward Moya, an analyst at Oanda, in an emailed note.
🔑 Key Movements of the Day:
Bitcoin (XBT) continued its rise, as risk aversion subsides, and surpassed $44,000. The largest cryptocurrency by market capitalization added its fifth consecutive day with gains, its longest upward streak since September.
The recovery comes after the digital token fell as much as 50% from its all-time high of $69,000 in November last year. The performance is not unique to bitcoin and Ether (XET), the second largest cryptocurrency, was up 5.9% on the day at $3,180.07 at 15:30 New York time.
Crude oil halted its rally of last week, but it is still trading at seven-year highs and both benchmarks are above $91 per barrel.
Investors are keeping an eye on the Iran nuclear deal as diplomats return to Vienna on Tuesday to resume negotiations, which could restore the flow of oil to global markets. On Friday, the U.S. signed several waivers related to Iran’s civilian nuclear activities to facilitate diplomatic efforts.
🥇 The Leader:
Argentina’s Merval (MERVAL) was the best performing stock market in Latin America on Monday, halting a three-session losing streak, in the midst of uncertainty generated by the beginning of the agreement with the International Monetary Fund, which will have to be endorsed by Congress.
“This week there are several points to monitor. Among them, the details of the agreement and its subsequent treatment in Congress and the signals that the ruling coalition offers about its internal disputes,” wrote analysts at Portfolio Personal Inversiones, a financial investment company based in Argentina.
Shares of Transportadora Gas del Norte (TGN04), Central Puerto (CEPU) and Aluar Aluminio Argentino (ALUA) were among the best performers in Monday’s session.
The Mexican stock exchange remained close due to a public holiday.
📉 A Bad Day:
Brazil’s Ibovespa (IBOV), the largest stock exchange by market capitalization in Latin America, fell by 0.22%, reflecting the volatile session in the U.S. Investors are also attentive to projects that would allow the federal government to reduce or eliminate some energy taxes and which are advancing in Congress.
Analysts are concerned because they see the initiative as a sign that President Jair Bolsonaro is willing to spend freely in the run-up to the October elections, Bloomberg reported.
Investors also reacted to the Focus report, released this morning by the Central Bank, which revealed that inflation as measured by the Broad Consumer Price Index is expected to rise 5.44% in 2022, up from the 5.38% previously projected.
Last week, the Central Bank raised the key interest rate by 150 basis points to 10.75%. The monetary policy authority has raised borrowing costs by a total of 875 basis points since March last year, the most aggressive tightening cycle in the post-pandemic world.
🍝 For the Dinner Table Debate:
Meta (FB) threatened to remove Facebook and Instagram from Europe if it is prevented from continuing to transfer data back to the United States.
The warning from the company led by Mark Zuckerberg came in the company’s annual report, after European authorities moved to evaluate regulations related to how information is transferred across the Atlantic. The European Court of Justice ruled in July 2020 that the agreement known as Privacy Shield was invalid.
The response to Meta’s threat from some European officials was swift. German Economics Minister Robert Habeck said that “after being hacked, I have lived without Facebook and Twitter (TWTR) for four years and life has been fantastic”.
At the same event where Habeck was present, French Finance Minister Bruno Le Maire added that “life is very good without Facebook and we would live very well without Facebook”. He also remarked that “the digital giants must understand that the European continent will resist and assert its sovereignty”.