A roundup of Monday’s stock market results from across the Americas
👑 Chile’s IPSA leads in Latin America:
Investor caution led to a mixed day for Latin America’s main stock markets on Monday, with Chile’s IPSA (IPSA) and Peru’s S&P/BVL (SPBLPGPT) the only two to close higher. Chile’s benchmark stock index posted an increase of 1.33%, driven by the performance of the industrial sector, energy and real estate.
The Chilean stock index’s rise was driven by the shares of Compañía Sudamericana de Vapores (VAPORES), which gained 6,69%; Empresas CMPC (CMPC), which rose 4.25% and Parque Arauco (PARAUCO), which gained 3.88%.
Chilean company Lipigas, through its subsidiary Lima Gas S.A., bought 60% of the registered shares of Limagas Natural Movilidad, a company dedicated to the construction and operation of refueling stations for the supply of liquefied natural gas (LNG) as natural gas for vehicles.
On the other hand, SK On announced that it will buy lithium from Chilean SQM SK On Co. amid the South Korean electric vehicle battery manufacturer’s effort to strengthen its supply chain in response to the US Inflation Reduction Act. SK On will receive up to 57,000 tons of lithium hydroxide from SQM for five years starting in 2023, according to the terms of the agreement, the South Korean firm informed on Sunday in a statement.
Meanwhile, the Peruvian stock market rose 0.62%, buoyed by the shares of AENZA SA (AENZAC1), Intercorp Financial Services (IFS) and Corporación Aceros Arequipa (CORAREI1).
📉 A bad day for the Ibovespa:
Pressured by the drop in Petrobras (PETR3;PETR4) and Banco do Brasil (BBAS3) shares, the latter falling 4%, Brazil’s Ibovespa (IBOV) closed lower on Monday, dropping 2.38%.
Investors continued to look for signs on how the economic cabinet of President-elect Luiz Inácio Lula da Silva’s government will be formed, as they pondered the corporate balance sheet season, in a busy week for Brazilian companies’ reports.
Shares of Yduqs (YDUQ3), Americanas (AMER3) and Cogna Educacao (COGN3) were among those with the sharpest losses, down 10.64%, 9% and 8.72%, respectively.
🗽 On Wall Street:
US shares rose in a broad-based rally on Monday that swept up small caps as well as blue-chip stocks, ahead of midterm elections and inflation data later this week. The dollar fell with Treasuries.
The S&P 500 closed near session highs, with all but three of the 11 industry groups advancing. The tech-heavy Nasdaq 100 also caught bids, while the Dow Jones Industrial Average outperformed, rising as much as 1.5% with health-care names topping the leaderboard. The Russell 2000 rallied, reversing losses in afternoon trading.
The S&P 500 rose 0.96%, the Dow Jones Industrial Average 1.31% and the Nasdaq Composite (CCMPDL) 0.85%.
Stocks gained for a second day ahead of US midterms. Morgan Stanley’s Michael Wilson said polls pointing to Republicans winning at least one chamber of Congress provide a potential catalyst for lower bond yields and higher equity prices.
“Has the stock market been voting early?” said Ed Yardeni, founder of his namesake research firm, referring to the S&P 500 bounce back from an October low. “Tomorrow’s midterm elections may further boost stock prices in coming months if history is a guide. Our soft-landing economic outlook, if it pans out (60% subjective odds), may be another wind at the stock market’s back.
Optimism, for the moment, is outweighing concerns over the Federal Reserve’s resolute campaign against price surges, signs of stress in US corporate performance and China’s announcement it will “unswervingly” adhere to current Covid Zero policy.
Meanwhile, Facebook parent Meta Platforms Inc. rallied on plans to cut jobs. Tesla Inc. was the biggest drag on the S&P 500 as the stock continued to sell off in the wake of Chief Executive Officer Elon Musk’s purchase of Twitter Inc. Apple Inc. bounced back from earlier losses triggered by a report saying it expected to produce at least three million fewer iPhone 14 handsets than originally anticipated this year.
Lyft Inc. fell in postmarket trading after the ride-hailing giant reported weaker-than-expected rider growth, overshadowing better profits from higher fares.
Meta (META) shares recovered 6.53 while Apple (APPL) shares broke a five-session streak of declines.
Swaps markets are leaning toward a 50 basis-point Fed rate increase in December, after a fourth consecutive jumbo hike to a target range of 3.75% to 4% at last week’s meeting. Rates are expected to peak slightly above 5% around mid-2023.
The latest US inflation reading due Thursday will be closely watched after the core consumer price index rose more than forecast to a 40-year high in September. Even if prices begin to moderate, the CPI is far above the Fed’s comfort zone.
“Since we might not know the answer to what the makeup of Congress will be this week, Thursday’s CPI number will be very important once again,” Matt Maley, chief market strategist at Miller Tabak + Co., said in a note. “Even if we get a better-than-expected CPI number later this week, the odds that it will only create a very short-term bounce are high. Before long, the stock market should roll-over once again.”
In the corporate debt market, Oracle Corp.’s long-awaited acquisition financing is leading 15 US high-grade issuers looking to get ahead of consumer price index data on Thursday and a bond market holiday on Friday.
Meanwhile, Chinese stocks listed in the US fell Monday after health authorities repeated their strict adherence to the country’s Covid Zero policies. The Nasdaq Golden Dragon China Index slid more than 2%, halting a four-day rally.
On the currency markets, the Bloomberg Dollar Spot Index fell 0.4%, the euro rose 0.6% to $1.0021, the British pound rose 1.2% to $1.1514 and the Japanese yen was little changed at 146.60 per dollar.
🔑 The day’s key events:
The dollar index continues to weaken ahead of inflation data and the US midterm elections.
“US dollar data that a few months ago was very favorable currently doesn’t seem to be having a significant impact,” said Steve Englander, global head of G-10 currency analysis at Standard Chartered Plc.
In addition, despite China’s Zero Covid policy, risk assets were the main purchase by investors. So far the debates about the future of the greenback increased on whether it is about to hit its highs after the Fed rate hike.
Some investors such as M&G Investments are becoming more cautious about the Fed’s tightening path and reducing long bets on the dollar, according to a Bloomberg report.
In this regard, TD Securities (TD) said that upward pressure on the dollar may begin to ease as sensitivity to interest rate hikes is reduced; however, there are those who believe that the greenback’s strength should not be ruled out just yet, such as Commonwealth Bank of Australia Ltd.
🍝 For the dinner table debate:
Carvana, a US-based used car retailer, began trading at new all-time lows and is on the verge of erasing more than half of its market value in two trading sessions. The combination of poor quarterly results and the improvement in the supply chain, which has normalized the production of new cars, has impacted demand for used cars.
Added to this are the inflationary pressures that have increased financing costs for vehicle purchases in the face of interest rate increases by the Federal Reserve. These elements led analysts at Morgan Stanley (MS) to withdraw their rating and also mentioned that the shares could be worth as little as $1.
Since the delivery of its report on November 3, Carvana shares accumulated a loss of 48.5% and went from being worth $14.35 to $7.39 per share.
Leidys Becerra and Estephanie Suárez, content producers at Bloomberg Línea, and Stephen Kirkland and Vildana Hajric of Bloomberg News, contributed to this report.