A roundup of Thursday’s stock market results from across the Americas
🌎 Colombia’s Colcap leads in LatAm:
Latin American stock markets closed the day mixed, with some markets rebounding after last Wednesday’s generalized fall. This was the case of the Bogota Stock Exchange (COLCAP), which rebounded 1.12% after the previous decline. Although it could not completely erase the losses, the Colombian Colcap rose driven by the energy (2.74%), finance (1.51%) and utilities (0.27%) sectors.
The best-performing shares of the day were Canacol Energy (CNEC), up 4.28%; Ecopetrol (ECOPETL), up 2.64%; and BanColombia (PFBCOLO), up 2.57% at the close of the session.
A Moody’s report published today pointed out that if the threat of an El Niño phenomenon materializes by the end of 2023 and the rest of 2024, Ecopetrol and Canacol Energy could benefit because their businesses are linked to the production and commercialization of gas.
The general index of the Lima Stock Exchange in Peru (SPBLPGPT) also rebounded, with an increase of 1.06% at the close of the day. The utilities (1.97%) and materials (0.47%) sectors drove the session’s gains. Meanwhile, the shares that drove the Lima market upwards were those of Enel Distribución (ENDISPC1), with an increase of 4.55%; Intercorp Financial Services (IFS), with an increase of 1.63%; and Southern Copper Corporation (SCCO), which also rose by 1.63%.
The S&P/BMV IPC index of the Mexican Stock Exchange (MEXBOL) gained 0.30%, boosted by by materials (2.20%) and the non-basic consumption (1.52%) sectors, but the fall in real estate (-1.74%) kept its gain in check.
The index that fell the most in the region on Thursday was Chile’s IPSA (IPSA). All sectors of the Chilean stock market closed in the red, with public services (-2.12%) and real estate (-1.77%) leading the decline.
Likewise, Argentina’s Merval (MERVAL) fell 0.83% to 415,515.66 points.
🗽On Wall Street:
Stocks fell as the selloff in the world’s biggest bond market deepened ahead of the jobs report, which is expected to provide clues on the outlook for the Federal Reserve’s next steps.
In late trading, a $207 billion exchange-traded fund tracking the Nasdaq 100 (QQQ) whipsawed after Amazon Inc.’s bullish revenue forecast and Apple Inc.’s disappointing iPhone sales. Another slide in longer-dated Treasuries put them on pace for their worst week of 2023 amid signs of unexpected economic strength and concern over a widening budget deficit.
A report Thursday underscored resilient demand for workers, while separate numbers showed productivity jumped the most since 2020, blunting labor costs. Those figures preceded the government’s employment data — forecast to show the US added 200,000 jobs in July. While that would be the weakest print since the end of 2020, it’s still a strong advance historically.
“The good news is that almost everyone agrees that an imminent recession isn’t very likely,” said Ed Yardeni, founder of his namesake research firm. “That reduces the downside concerns about corporate earnings, but it increases the downside potential for the stock market’s valuation multiple if the bond yield continues to rise.”
Bill Ackman, founder of Pershing Square Capital Management, said he’s short 30-year Treasuries “in size” — as both a hedge against the impact of higher long-term rates on stocks and also as a standalone bet. Bill Gross, the one-time king of the bond world, noted he’s “overall bearish” on 10-year yields, while Berkshire Hathaway Inc. Chairman Warren Buffett told CNBC he had been buying Treasury bills and would likely continue. Tesla Inc.’s chief Elon Musk said that short-term T-bills are “a no-brainer.”
The S&P 500 fell for a third straight day. Tech megacaps, which bore the brunt of the recent selling in equities, outperformed. Treasury 30-year yields hovered near 4.3%, extending a three-day surge to about 30 basis points. The dollar was little changed. The pound wavered as the Bank of England warned its fight against inflation may require tighter borrowing conditions for an extended period.
Jobs report
A survey conducted by 22V Research shows that investors expect Friday’s jobs figures to show strong employment and weak wage inflation.
Roughly 65% of respondents are betting payrolls will be greater than consensus. Meantime, 55% expect average hourly earnings to trail estimates — which helps explain why they also expect the equity-market reaction to be muted, the firm noted.
To Jason Draho at UBS Global Wealth Management, markets may actually be listless for the next month in the absence of any significant catalyst and after a strong run.
“Markets are already pricing in a soft landing, and increasingly with the belief that relatively little growth pain is required for inflation to gradually return to 2%,” Draho noted. “The markets are vulnerable to any signs that the economy, with the Fed’s steering, is at risk of not sticking to that soft landing.”
A steeper yield curve
Meantime, rate options traders are paying through the nose for protection against further increases in long-maturity Treasury yields.
A metric that compares demand for bearish put options to demand for bullish call options shows the widest divergence since September for options on CME Group Inc.’s US Treasury Bond Futures contract, which currently tracks a bond that matures in 2039. The gaps are less extreme for options on shorter-maturity Treasury futures.
The steepening of the yield curve extended a trend since the Bank of Japan surprised markets last week with a policy tweak. At 4.88%, two-year yields are 71 basis points higher than those on the 10-year note. That’s compared to a gap of 102 basis points two weeks ago.
“I remain wary of taking duration risks and still much prefer short duration bonds,” said Peter Boockvar, author of the Boock Report. “This sovereign bond bubble continues to unwind and the problem now is higher rates just exacerbates the sovereign debt rise as interest expense starts to explode higher, everywhere, not just in the US, highlighted by the Fitch downgrade.”
Elsewhere, oil rose after Saudi Arabia prolonged its unilateral production cut by another month and hinted that deeper reductions may be on the way.
After the closing bell:
- Apple reported lower-than-anticipated quarterly sales of the iPhone, its flagship product, overshadowing record-setting services revenue at the world’s most valuable company.
- Amazon gave a sales outlook that topped estimates on a strong performance from its main e-commerce business.
- Coinbase Global Inc., the largest US cryptocurrency exchange, said its second-quarter loss narrowed and revenue exceeded estimates.
- Booking Holdings Inc. reported second-quarter revenue that beat analysts’ estimates, reflecting strong demand for travel despite higher prices for flights and accommodations.
- DraftKings Inc. posted second-quarter sales that beat expectations as the online sportsbook raised its forecast for the year.
- Gilead Sciences Inc. lowered its earnings outlook for the year as a result of litigation costs accrued from settlements made to some plaintiffs in an antitrust lawsuit over its HIV drugs.
- Amgen Inc. raised its profit and revenue guidance for the year as the drugmaker’s overall second-quarter results exceeded Wall Street analysts’ expectations despite the underperformance of two key products.
On the currency markets, the Bloomberg Dollar Spot Index was little changed, the euro was little changed at $1.0947, the British pound was little changed at $1.2706 and the Japanese yen rose 0.5% to 142.57 per dollar.
🍝 For the dinner table debate:
Former US President Donald Trump pleaded not guilty to charges accusing him of conspiring to obstruct the 2020 presidential election and interfere with the voting rights of the country’s citizens. He is expected to remain free while the prosecution continues.
This is the third criminal case against the former president, and the Fulton County district attorney in the state of Georgia is expected to announce whether she will seek new formal charges tied to her investigation into election interference efforts in that state.
Trump has criticized the criminal cases against him and described them as politically motivated. In a statement Tuesday, his campaign said the Washington indictment involved “trumped-up charges” brought by President Joe Biden’s “weaponized Justice Department” to interfere in the 2024 election.
Paola Villar S, a content producer at Bloomberg Línea, and Rita Nazareth of Bloomberg News, contributed to this report