A roundup of Monday’s stock market results from across the Americas
🌎 Markets close mixed in LatAm:
In Latin America, stock markets closed mixed with Brazil’s Ibovespa (IBOV) leading the biggest losses among its regional peers and Argentina’s Merval (MERVAL) leading gains amid a highly volatile day following the PASO elections held on Sunday.
The Merval closed with a 3.30% gain after a surprise in the election polls that sent shivers through the markets after economist Javier Milei won a narrow lead in the race for the country’s presidency. Milei took first place in 16 of the country’s 24 electoral districts.
At the beginning of the day the stock index plummeted, but in the end prices recovered and adjusted their values, mostly due to the effect of the devaluation.
Cresud (CRES), YPF SA (YPFD) and Bolsas y Mercados Argentinos (BYMA) shares had the best performance of the stock market session. “Yesterday’s performance is a black swan”, said a report by the consulting firm 1816. “It was nobody’s base scenario and forces a recalculation of investments”.
Brazil’s Ibovespa ended the day down 1.06%, dragged down by the performance of the non-basic consumer products, health and materials sectors. The fall of Vale (VALE3) dragged the index down. The mining company, which has the largest weight in the index calculation, fell -3.10% due to expectations of a slowdown in China. On the other hand, the share that fell the most during the day was YDUQS (YDUQ3), which dropped -14.46%.
On Monday night, the government released data on economic activity, and which showed a better than expected performance.
🇺🇸 On Wall Street:
Tech stocks had their best day in two weeks, helping US equities edge higher in light trading as traders weighed the prospect of a soft landing for the economy. Treasuries fell.
The tech-heavy Nasdaq 100 rose 1.2% as AI-favorite Nvidia Corp. and other technology giants drove Monday’s advance. On Friday, the tech-heavy benchmark had notched its longest weekly losing streak this year, the gauge has slid 3.5% in August. Smaller stocks were under pressure with the Russell 2000 touching the lowest in a month as risk-appetite waned.
August is typically a slow month due to low liquidity and moves in either direction should not be taken seriously, according to Jason Draho, head of asset allocation Americas at UBS Global Wealth Management.
“The fundamental outlook for the US economy hasn’t materially changed in the past two weeks,” Draho wrote. “Investors should take any data point or two and week-to-week market moves with a grain of salt, especially during the summer slowdown.”
Treasury yields wavered before ticking higher as high-grade corporate bond sales weighed on prices. The policy sensitive two-year advanced for the fourth day to approach 5%, while the 10-year traded at 4.19%, the highest since November.
Traders are betting interest rates will outpace inflation for years to come while investors sitting on record first-half gains are having to contend with central bankers warning they are in no rush to cut interest rates.
“Some retracement of the broad market since July 31 suggests to us a pause that refreshes has likely occurred, rather than the end of the bull market,” John Stoltzfus, chief investment strategist at Oppenheimer & Co., wrote in a research note. “We remain of the view based on improving economic and corporate fundamentals that the US economy could actually skirt a recession this cycle.”
Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, takes a dimmer view saying the economy is already in a rolling recession that will hit the services sector next.
“Consumption, profit margins and corporate pricing power are yet to be reset, as the delayed impact of tighter policy should ultimately pressure nominal gains,” she wrote.
Updates from China unnerved markets on Monday amid concerns about Country Garden Holdings Co. and private-wealth manager, Zhongzhi Enterprise Group Co. Country Garden, once China’s biggest developer, has emerged as the latest flashpoint of the country’s property woes.
“The more days that go by without a comprehensive fiscal stimulus plan the more clear it becomes there will not be one,” Brad Bechtel, a Jefferies strategist said of China’s central bank. “The big bazooka is not coming.”
Focus later this week will be on minutes of the Federal Reserve’s latest policy meeting as traders seek clues on the central bank’s next move. Investors who’d bet on a pivot to easier policy this year are having to adjust their bets as officials signal they will keep interest rates higher for longer.
In emerging markets, Argentina’s already-distressed debt sagged after a populist who vowed to burn down the central bank won surprisingly strong support in a primary vote.
The greenback strengthened while the offshore yuan fell to its weakest since November and the ruble crashed through the level of 100 to the dollar for the first time since March. In commodities, gold and crude slumped.
The Bloomberg Dollar Spot Index rose 0.3%, the euro fell 0.4% to $1.0905, the British pound fell 0.1% to $1.2681 and the Japanese yen fell 0.3% to 145.46 per dollar.
🍝 For the dinner table debate:
A new report by British company Online Mortgage Advisor shows where in Latin America buying or renting a property is more difficult, taking into account that salaries are more precarious to cover all needs amid high food inflation in the region.
Santo Domingo in the Dominican Republic is the city where it is most difficult to rent a property because of the sharp increase in prices compared to what their average salaries can cover, now needing 88% more of their salaries, reveals the research.
The Dominican capital registers the biggest change regarding the economic capacity to rent in the region. In 2018, whoever earned an average salary in Santo Domingo had to spend 110% ($392.99) of their income on rent for an apartment in the center. This figure has increased in the last four years to 198% ($915.04).
In second place is Guatemala City, where the monthly salary for rent has increased 143.92%; then Cancún, Mexico, where it has varied 102.62% in the last four years. The Brazilian cities of Sâo Paulo, Goiânia and Brasilia, as well as Buenos Aires, Belo Horizonte, Medellín and Monterrey complete the first 10 places in the ranking.
-- Leidys Becerra, a content producer at Bloomberg Línea, and Vildana Hajric and Isabelle Lee of Bloomberg News, contributed to this report.