A roundup of Monday’s stock market results from across the Americas
👑 Colombia’s Colcap leads in Latin America:
Latin American markets closed mixed on Monday, with the gains led by Colombia’s Colcap (COLCAP), which closed 1.06% higher, with the shares of Celsia S.A. (CELSIA) and Grupo Argos S.A. (PFGRUPOA) seeing the sharpest climbs, closing 7.96% and 5.86% higher, respectively.
The labor reform proposed by the government of President Gustavo Petro is ready in draft form, and would bring several adjustments to Sunday overtime pay and the regulation of work for digital platforms, as well as in labor guarantees to foreign workers.
Argentina’s Merval (MERVAL) gained 0.86%, boosted by the climb for Cresud S.A. (CRES), whose shares gained 8.52%.
Mexico’s S&P/BMV IPC (MEXBOL) climbed 0.62% and Chile’s IPSA (IPSA) 0.48%.
📉 Peru and Brazil close lower:
Peru’s S&P/BVL (SPBLPGPT) and Brazil’s Ibovespa (IBOV) closed with losses on Monday, down 0.17% and 0.08% respectively.
The Peruvian market continues to be the target of several companies that are betting on a greater growth space for e-commerce in the country in the medium and long term due to the strong potential of the local market. Alejandro Osores, country manager of Falabella told Bloomberg Línea that the portal has launched local initiatives in this first quarter of the year, which aim to maintain and accelerate growth in Peru.
Brazilian President Luiz Inácio Lula da Silva’s government increased fuel taxes on Monday in a bid to raise 28.8 billion reais ($5.53 billion) this year.
🗽On Wall Street:
US stocks ended Monday with modest gains after fluctuating for the final stretch of the trading session as investors attempted to come to terms with Federal Reserve policy that could remain restrictive for longer than previously expected.
The S&P 500 gained 0.31%, the Dow Jones Industrial Average 0.22% and the Nasdaq 100 (CCMPDL) bounced back after a dismal week for Wall Street, climbing 0.63%. The 10-year Treasury yield slid to hover around 3.92%. A dollar index retreated.
Among individual stock movers, Union Pacific Corp. was the best performer within the S&P 500 on Monday after saying it would replace its CEO this year amid pressure from a prominent shareholder. Zoom Video Communications Inc. rose in late trading after giving an upbeat profit forecast for the current period.
Investors have recently been recalibrating their forecasts for where rates will end up, given signs that inflation hasn’t been moderating as the Fed expects. Traders are pricing US rates to peak at 5.4% this year, compared with about 5% just a month ago. Fed Governor Philip Jefferson firmly standing by the central bank’s 2% inflation goal on Monday kept investors on the edge.
“We have had a bit of a repricing in markets in February where there is more concern that central banks will have more work to do,” Sam Lynton-Brown, global head of macro strategy at BNP Paribas, said on Bloomberg Television. “The view we have is that there’s still some further room to run on that repricing. So either equities are at risk to come lower or rates are at risk to head higher.”
In the near-term, both scenarios could play out if the markets price in a more hawkish policy outlook for the Fed, he said.
Meanwhile, fresh US data that investors contended with on Monday pointed to an economy that remains robust despite the Fed’s persistent rate hikes. US pending home sales rose last month by the most since June 2020, which could keep pressure on the Fed to stay hawkish.
Orders placed with US factories for business equipment also rose in January as companies continued to make longer-term capital investments despite uncertainty about where the economy is headed. And excluding transportation equipment, durable goods orders rose more than expected.
But for now, a more optimistic outlook for earnings estimates is helping ease fears that inflation will remain entrenched even as growth slows, drawing investors back to stocks. Those treading into this market risk are falling into a “bull trap” according to Michael Wilson, chief US equity strategist at Morgan Stanley. That view was echoed by Torsten Slok, chief economist at Apollo Global Management.
“A generation of investors has since 2008 been taught that they should buy on dips, but today is different because of high inflation, and credit markets and equity markets are underestimating the Fed’s commitment to getting inflation down to 2%,” Slok wrote in a note.
The risk-reward for equities remains poor, JPMorgan Chase & Co. strategists led by Marko Kolanovic wrote in a note.
“The risk-reward of holding bonds at this level of short-term yields looks better than equity (earnings yield) than any time since the great financial crisis,” they wrote.
The Bloomberg Dollar Spot Index fell 0.3%, the euro rose 0.6% to $1.0608, the British pound rose 0.9% to $1.2057 and the Japanese yen rose 0.2% to 136.25 per dollar.
🍝For the dinner table debate:
Elon Musk is once again the world’s richest person after briefly losing the spot to France’s Bernard Arnault.
Musk’s fortune has been boosted by the rise in Tesla Inc (TSLA) shares this year, and which have risen nearly 70%, up nearly 100% from its Jan. 6 intraday low as traders increase their bets on growth stocks with signs of economic strength and a slower pace of the Fed’s monetary tightening cycle.
Tesla also benefited from increased demand for its electric vehicles after cutting the price of several of its models.
Tesla shares rose 5.5% to $207.63 at 4 p.m. in New York on Monday, boosting Musk’s net worth to $187.1 billion, according to the Bloomberg Billionaires Index. This surpasses the $185.3 billion personal fortune of Arnault, the 73-year-old French tycoon behind luxury goods powerhouse LVMH.
Sebastián Osorio Idárraga, a content producer at Bloomberg Línea, and Vildana Hajric and Peyton Forte of Bloomberg News contributed to this report.