A roundup of Monday’s stock market results from across the region
👑 Chile leads in Latin America:
The Latin American stock markets did not follow the performance of those in the United States, and only Chile’s Ipsa (IPSA) obtained gains of 1.24% during the day, with better performance in the shares of the energy and materials sectors.
The Chilean government is trying to calm down investors regarding the reform processes taking place in the country. In an interview with Bloomberg Línea, Mining Minister Marcela Hernando, acknowledged that it is necessary to “calm the mood”, as she considers that lately “investors are being reserved” and “very expectant” due to a climate of global uncertainty, but also due to possible changes at a local level, such as a new Constitution.
She also pointed out that the mining sector should not feel threatened by the reforms that are being proposed in Chile.
Chilean startup NotCo, backed by Jeff Bezos, received a new, S$70 million round in a Series D extension led by Princeville Capital. The company says it will allocate the resources to a new business unit focused on business-to-business deals, as a continuation of the joint venture strategy with KraftHeinz announced in February.
📉 A bad day for the rest of the region:
Meanwhile, the rest of the region’s stock exchanges underperformed and fell on Monday. Argentina’s Merval (MERVAL) and the S&P/BVL Peru (SPBLPGPT), which had not traded since Wednesday due to national holidays, fell 2.75% and 2.33%, respectively.
Peruvian investors are now reflecting the deep political crisis that was marked since last Wednesday, when Pedro Castillo’s coup attempt was unsuccessful. Demonstrations have been marked in the country since Thursday, affecting different economic sectors such as aviation and mining, among others. Some groups have even threatened to stop work at Glencore’s Antapaccay and MMG’s Las Bambas copper mines.
In the face of social pressure, interim President Dina Boluarte, who took office five days ago, announced that she will send to Congress a bill to bring forward the general elections to April 2024, two years ahead of schedule.
Brazil’s Ibovespa (IBOV) also fell 2.02%, amid rumors that former minister Aloizio Mercadante may assume the presidency of BNDES or Petrobras in Lula da Silva’s new government. In addition, it was learned that the government may seek to modify the Public Companies Law, which further weighed on the stock market’s performance.
Colombia’s Colcap (COLCAP) fell 0.60% during the day.
The Mexican Stock Exchange did not trade due to a national holiday.
🗽 On Wall Street:
US stocks advanced with investors gearing up for Tuesday’s reading on consumer prices. US Treasuries ended Monday lower, erasing earlier gains.
The S&P 500 jumped 1.4% and the tech-heavy Nasdaq Composite (CCMPDL) gained 1.26% and the Dow Jones Industrial Average 1.58%. Treasury yields rose, with the 10-year rate around 3.61%. The dollar advanced.
All eyes will be on the US consumer price index reading on Tuesday, which is expected to show prices, while still high, are continuing to decelerate. The S&P 500 — in a best-case scenario — could rally as much as 10% on a softer CPI reading, according to JPMorgan Chase & Co.’s sales and trading desk. However, the chances of that happening is about 5%, according to their analysis. A cooler inflation reading from the prior month spurred a 5.5% daily surge, with the S&P 500 index notching its best post-CPI day on record.
A subdued CPI print would justify the Federal Reserve’s projected half-point move on Wednesday and shed light on whether markets can expect rate cuts in late 2023. While central bank officials have indicated a downshift in the pace of rate hikes, they have also emphasized that borrowing costs will need to remain restrictive for some time.
“I wouldn’t read anything into the move today. The move will be after CPI, one way or another,” said John McClain, portfolio manager at Brandywine Global. “People are getting lulled into a false sense of security on a soft landing. The Fed isn’t cutting anytime soon. This is just going to be a longer cycle compared to 2020.”
Las acciones de Estados Unidos avanzaron al inicio de la semana mirando de cerca la publicación del Índice de Precios al Consumidor (IPC) que se hará el martes y las decisiones que tomará la Reserva Federal sobre su política monetaria el miércoles.
Following the Fed, the European Central Bank will announce its rate decision Thursday. Markets will also contend with decisions from the Bank of England and monetary authorities in Mexico, Norway, the Philippines, Switzerland and Taiwan.
On the currency markets, the Bloomberg Dollar Spot Index rose 0.2%, the euro was little changed at $1.0535, the British pound was little changed at $1.2271 and the Japanese yen fell 0.9% to 137.73 per dollar
🔑 The day’s key events:
Oil recovered on Monday from its worst week since April 2022 closed on Friday, recalling some of the losses accumulated in the year.
Traders weighed the fact that the Keystone pipeline, operated by TC Energy Corp. still has no reopening date as the company continues recovery efforts as it connects fields in Canada to refineries on the U.S. Gulf Coast.
Benchmark WTI rose 3.03% to $73.17 per barrel, while benchmark Brent gained 2.72% to $78.17 per barrel.
Crude is on track for its first consecutive quarterly decline since mid-2019 as the demand outlook worsens and tight liquidity exacerbates price swings toward the end of the year, Bloomberg reported.
🍝 For the dinner table debate:
Cryptocurrencies mostly fell on Monday as the risk of further contagion continues to weigh on investor sentiment a month after Sam Bankman-Fried’s FTX exchange filed for bankruptcy protection.
Bitcoin (XBT) fell as much as 1.4% on Monday to $16,882 before recovering. Ether also dipped slightly, while altcoins such as Avalanche and Dogecoin posted more significant declines.
The insolvency of one of the most established cryptocurrency companies put downward pressure on prices, which had already been falling for months. At the beginning of the fourth quarter, bitcoin was trading near $20,000, but in the last month, the token has hovered around $16,500, without exceeding $17,400. Bitcoin has lost 63% this year.
Instead of expanding cryptocurrency portfolios, clients have unwound and hedged their cryptocurrency exposures, which has reduced open interest in bitcoin and ethereum. Bitcoin fell 16% in November, its biggest monthly decline since June.
Sebastián Osorio Idárraga, a content producer at Bloomberg Línea, and Isabelle Lee and Emily Graffeo of Bloomberg News, contributed to this report.