A roundup of Friday’s stock market results from across the region
👑 Mexico leads in Latin America:
Latin America’s markets closed mixed on Friday, with Mexico’s S&P BMV/IPC index (MEXBOL) gaining the most, climbing 0.32%, boosted by the shares of Arca Continental (AC*), Operadora de Sites (SITES1) and Banco del Bajio (BBAJIOO).
BMW AG said it will invest $872 million in its plant in San Luis Potosí, Mexico, to manufacture electric vehicles, as part of a broader effort to increase its global production network, while Tesla Inc. (TSLA) is expected to announce investment in Mexico, as the country works to expand infrastructure and renewable energy supply to take advantage of the boom in business relocation, according to statements by Foreign Minister Marcelo Ebrard.
📉 A bad day for Argentina’s Merval:
Argentina’s Merval index (MERVAL) suffered the sharpest losses in the region, falling 3.81%, dragged down by te shares of Telecom Argentina (TECO2), Banco Macro (BMA) yandTransportadora Gas Sur (TGSU2).
“[The fall] takes place in a context in which equities had accumulated increases that extended several days, which could extend and deepen further declines”, said Leonel Buccolo, an executive at Rava Bursátil.
The first month of the year would ratify the acceleration in prices that marked the last month of 2022. This is reflected by the consulting firms that participated in the latest market expectations survey (REM) of the central bank (BCRA), which expect 5.5% inflation for January 2023.
These consulting firms project an inflation of 5.5% for February, in line with what was expressed by specialists in the last days, which project a floor of 5% monthly for the first quarter of this year, far from the 3% pointed out by the Ministry of Economy. The annual projection for 2023 by those who participated in the REM is 97.6%, above the 94.8% of 2022.
🗽On Wall Street:
US stocks halted a three-day advance after a volatile Friday session that saw equities swerve between modest gains and losses as investors contended with data pointing to a robust labor market.
The S&P 500 still notched a weekly gain that took the index to its highest level since August. The Nasdaq 100 also scored a weekly advance, despite heavy selling after Apple Inc., Alphabet Inc. and Amazon. com Inc. reported disappointing results Thursday. Friday’s session capped a hectic week that brought a raft of corporate earnings, economic data and a Federal Reserve policy decision.
The S&P 500 dropped 1.04%, but its weekly gain pushed it to its highest level since August, while the Nasdaq Composite (CCMPDL) slipped 1.59% and the Dow Jones Industrial Average 0.38%.
Yields on Treasuries spiked higher after a surprisingly strong jobs report that should give the Fed room to remain aggressive if inflation stays elevated. The two-year yield jumped about 19 basis points after touching a low for the year earlier in the week.
“We are concerned that on the back of this kind of jobs report, it definitely holds the Fed to a higher-for-longer path,” said Lisa Erickson, senior vice president and head of public markets group at US Bank Wealth Management. “There are of course other data points that are going to come before the next meeting, but it certainly puts a placeholder that labor market continues to run some risk of being extremely tight.”
Trading on swaps markets indicated expectations that fed funds rates will almost hit 5%, up by almost 10 basis points on the day. A strong reading on the American economy’s services sector also bolstered concern that growth hadn’t sufficiently cooled to temper price gains. A dollar index rose the most on Friday since late September.
Geopolitical tensions simmered in the background, with the Biden administration postponing Secretary of State Antony Blinken’s upcoming trip to Beijing after detecting a Chinese surveillance balloon over sensitive nuclear sites in Montana.
Regarding the jobs report, Jeffrey Rosenberg, a senior portfolio manager at BlackRock Inc., said: “This is a big pushback to the slowing. This is a reminder of what Powell tried to say to the market — though the market wasn’t listening — that their main concern is they’re not yet seeing the impact of their tightening in the labor markets.”
For his part, John Leiper, chief investment officer at Titan Asset Management, said: “There is a huge disparity between market pricing and the commentary coming from central banks. Yes, you could make the case that Jerome Powell was a little more dovish than expected, but he was very clear that his intention is to keep rates higher for longer until the job is done, and that simply isn’t the case yet. Today’s employment data might catalyze a reversion in this apparent dichotomy.”
Regarding currencies, the Bloomberg Dollar Spot Index rose 1.2%, the euro fell 1% to $1.0796, the British pound fell 1.4% to $1.2051 and the Japanese yen fell 1.9% to 131.14 per dollar.
🔑 The day’s key events:
Oil fell to the lowest levels since early January. Prices rallied early in the session as record US unemployment figures boosted optimism about demand, however, they fizzled as concerns about rising US stockpiles and weaker-than-expected Chinese demand dominated the session.
Brent crude, the global benchmark, fell below $80 a barrel, while West Texas Intermediate fell to below $74 a barrel. Earlier, the price had fallen to $73.13, the lowest level since January 5.
“Commodity fundamentals are not improving or tightening much,” said Bart Melek, chief commodity strategist at TD Securities. “There is a view that global supplies are resisting Russian sanctions. And, of course, we remain concerned about headwinds from China.”
🍝For the dinner table debate:
The overall cost of basic foodstuffs, from wheat to cooking oil, continues to fall. But this has not been reflected on supermarket shelves. Nearly a year after the Russian invasion of Ukraine, which caused several food items to rise sharply, the UN commodity cost index fell for the tenth month in a row in January.
The streak of declines, the longest in at least 33 years, contrasts with food inflation worsening the cost-of-living crisis in many parts of the world.
Food executives warn that more price hikes are on the horizon, even as commodities such as palm oil and dairy products decline. Diplomats speak of the worst food crisis since World War II, with parts of Africa on the brink of famine.
This striking dissonance highlights the significant time lag between the impact of market prices and the prices households pay.
Leidys Becerra, a content producer at Bloomberg Línea, and Peyton Forte and Isabelle Lee of Bloomberg News, contributed to this report.
