A roundup of Tuesday’s stock market results from across the Americas
🌎 Argentina’s Merval continues lead in LatAm:
In Latin America, equities started the day higher, in a context of improved market confidence and low activity in world stock markets. However, by the close, Latin American markets closed mixed, with the benchmark indices of Peru (SPBLPGPT), Brazil (IBOV) and Mexico (MEXBOL) closing lower.
In contrast, Argentina’s Merval (MERVAL) maintained its leadership in the region: the index rose 1.11%. The best performing stocks on the day, which also saw little movement due to the U.S. holiday, were those of companies such as Carlos Casado S.A. (CADO), up 7.12%; Capex S.A. (CAPX), up 4.91%; and Richmond Laboratories (RICH), up 3.20%.
The second best performing stock exchange in Latin America on Tuesday was the selective index of the Chilean stock exchange (IPSA), which rose 0.69% to 5,894.34 points, its highest level ever.
The key sectors for the rise of Chile’s IPSA were non-basic consumer products (1.93%), materials (1.12%) and basic consumption (1.11%). In this line, the shares that rose the most during the day were those of Ripley (RIPLEY), with an increase of 5%; Latam Airlines (LTM), up 2.63%; and the shares of Cencosud (CENCOSUD), up 1.91%.
Credicorp Capital noted that the most traded shares of the day were Falabella (FALAB), with $14 million, and Sociedad Química y Minera (SQM), with a volume of $5 million.
Despite the low trading volume, Chile’s IPSA was boosted by the latest news on Chile’s economic activity, which remained down 2% year-on-year in May. The figures reinforce expectations that the central bank will cut its benchmark interest rate at its next meeting, which could further boost equities.
🗽On Wall Street:
European real estate shares headed for their biggest three-day advance since March, while oil climbed as traders weighed supply cuts.
Global stock market trading was light on Tuesday, with US exchanges closed for the Independence Day holiday. Europe’s Stoxx 600 edged higher on trading volume that was a third lower than the 30-day average. US futures were little changed, while Canada’s benchmark equity gauge rose.
Real estate topped gains among European industry groups as Swedish property manager Castellum AB jumped as DNB Bank ASA recommended buying the stock because of its attractive valuation. Belgium’s Warehouses de Pauw CVA rose after boosting its earnings outlook.
Deal activity also sparked investor interest on Tuesday. Vienna-based OMV AG surged after Bloomberg News reported the firm and Abu Dhabi are in talks to create a chemicals and plastics company worth more than $30 billion.
Meanwhile, Casino Guichard-Perrachon SA shares were suspended after surging 16%, as the French retailer received offers from Czech billionaire Daniel Kretinsky and a group led by telecom billionaire Xavier Neil.
After stocks rallied in the first half of the year, investors are worried that higher rates and a worsening economic backdrop will limit gains from here on. Friday’s nonfarm payrolls report will be closely watched for clues on the trajectory of monetary policy, before focus turns to the earnings season next week.
Risks to stocks following H1 rally?
Meanwhile, strategists are increasingly warning about the risks to US stocks after a steep first-half rally. Citigroup Inc.’s Chris Montagu said positioning looks “very extended” and cited data showing that investors piled into bullish bets on US stock futures toward the end of June.
Among other notes of caution, Goldman Sachs Group Inc. strategists wrote that it’s too early to dismiss the risk of higher interest rates weighing on stocks. On Monday, a key segment of the Treasury yield curve approached its most inverted level in decades, with the two-year note yield exceeding the 10-year rate by as much as 110.8 basis points.
“We remain cautious on equities amid a broadly muted economic backdrop,” said Luca Paolini, chief strategist at Pictet Asset Management. “A gap has opened up between earnings expectations and leading economic indicators. At some point, the gap will have to close. Either the economy will rebound — which we think unlikely — or equities will reprice.”
Elsewhere, Brent crude traded near $76 a barrel as oil traders considered the effects of output cuts. On Monday, Saudi Arabia said that it will prolong a unilateral 1 million barrel-a-day supply reduction into August, a move traders had widely expected. Russia announced a reduction in exports, while Algeria planned to make more modest curbs.
On the currency markets:
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0882
- The British pound was little changed at $1.2714
- The Japanese yen was little changed at 144.46 per dollar
- The offshore yuan was little changed at 7.2292 per dollar
- The Mexican peso was little changed at 17.0555
🍝 For the dinner table debate:
The Organization for Economic Co-operation and Development (OECD) said Tuesday that inflation in the world’s most advanced economies has progressively slowed to its lowest level since December 2021. However, the agency warned that underlying indexes are showing a little more strength.
The index that measures this level of inflation from consumer prices in the most advanced economies globally fell to 6.5% in May, according to the OECD. Meanwhile, the underlying index - which excludes components such as food and energy, usually more volatile to price changes - was 6.9% in the fifth month of the year.
The OECD noted that all members of this group have seen a slowdown in inflation with the exception of the Netherlands, Norway and the United Kingdom. The figures highlight that core inflation remains persistent even though the overall data may signal some progress by monetary policy officials in their attempt to control consumer prices.
Paola Villar S., a content producer at Bloomberg Línea, and Namitha Jagadeesh of Bloomberg News, contributed to this story.