A roundup of Monday’s stock market results from across the Americas
🌎 Peru’s stock market leads LatAm gains:
Latin American markets closed a mixed day, with three of the five indices that traded on Monday rising at the end of the session. Colombia’s MSCI index (COLCAP) remained closed for a holiday.
The best performing market was the Lima Stock Exchange (BVL) general index in Peru (SPBLPGPT), which rose 0.65% at the close. César Romero, head of Research at Renta4 Peru, highlighted that the Peruvian market followed the rhythm of the rise of stocks on Wall Street, with Cementos Pacasmayo (CPACASC1), Credicorp (BAP) and Intercorp Financial Services (IFS) leading the good performance: these stocks registered rises of 1.80%, 1.31% and 1.22% respectively.
In the run-up to Sunday’s primary elections, Argentina’s Merval (MERVAL) also rose by 0.18%. The shares of Pampa Energía (PAMP), Cablevisión Holding (CVH) and Creud S.A. (CRES) led the day’s gains, with increases of 2.78%, 2.35% and 1.80%, respectively. In contrast, the quotation of the dollar at the parallel and official levels soared: the blue dollar is about to touch the ceiling of 600 pesos per dollar, as uncertainty in the local market moves, while the wholesale dollar recorded its strongest advance since 2020.
The third market that appreciated most at the close of trading Monday was the S&P/BMV IPC index of the Mexican Stock Exchange (MEXBOL), with a 0.08% increase. The monetary policy meeting of the Central Bank of Mexico (Banxico) will be held this week, and there is unanimous consensus among analysts that Banxico’s board of directors will maintain the interest rate at 11.25% in its monetary policy announcement on Thursday, August 10.
Meanwhile, Brazil’s Ibovespa (IBOV) and the IPSA (IPSA) index of the Santiago Stock Exchange also fell.
🗽On Wall Street:
Stocks rebounded after posting their worst week since March as earnings rolled in. Treasuries fell as remarks from a Federal Reserve official signaled interest rates could remain higher for longer to tame inflation pressures.
The S&P 500 halted a four-day drop while the Dow Jones Industrial Average saw its biggest advance in more than seven weeks. Berkshire Hathaway Inc. hit a record as its results beat estimates. Amazon Inc. (AMZN) rose after a news report it will meet with the Federal Trade Commission to avoid an antitrust lawsuit. Tesla Inc. (TSLA) slid as its chief financial officer stepped down in a surprise shakeup at Elon Musk’s company. Apple Inc. notched its longest losing streak this year.
In late trading, Beyond Meat Inc. fell as the plant-based burger company said it’s unlikely to hit its goal of becoming cash-flow positive in the second half of the year. Palantir Technologies Inc. climbed after raising its profit forecast and authorizing a $1 billion share buyback. Lucid Group Inc. gained after the maker of luxury electric sedans assured investors it’s on track to its achieve full-year production target.
Ten-year US yields resumed an advance that drove them last week to the highest since November. Bulging sales of Treasuries are about to deliver a major test of investor demand and determine whether a selloff has room to run as the market braces for the biggest round of refunding auctions since last year. The bond market has to absorb a combined $103 billion of 3-, 10- and 30-year auctions before the week is out — up $7 billion from the May slate.
Fed Governor Michelle Bowman said additional hikes “will likely be needed.” Meantime, Fed Bank of New York President John Williams cited the necessity to keep policy restrictive “for some time” — while noting rate cuts may be warranted next year if inflation slows. Traders also awaited the consumer price index due later this week for clues on the policy outlook.
“Most of the market sees the Federal Reserve holding the fed funds rate at its current level through the rest of this year,” said Anthony Saglimbene, chief market strategist at Ameriprise. “Depending on how this week’s inflation reports come in, that forecast may see some changing odds, creating more stock volatility in the near term.”
Morgan Stanley’s Michael Wilson said that Fitch Ratings’ downgrade of US government debt last week and the ensuing selloff in the bond market suggests that “investors should be ready for potential disappointment” on economic and earnings growth.
A clear majority of investors expect a US recession before 2024 is out, leading them to view the current bull market in stocks as ephemeral and to favor long-term US Treasuries. That’s the takeaway from the latest Markets Live Pulse survey, which showed that roughly two-thirds of the 410 respondents anticipate a downturn in the world’s biggest economy by the end of next year.
Survey respondents appear to be looking past the economy’s current resilience and anticipating further damaging ripple effects from the Fed’s cumulative tightening.
“It’s important for investors to remain vigilant and not become complacent as the market’s inflation and Federal Reserve fears remain intact,” said Ryan Belanger, founder and managing principal at Claro Advisors. “Gasoline prices have been rising in recent weeks and Thursday’s CPI report may reflect that, which would boost the Fed’s arguments for remaining aggressive with policy.”
More corporate highlights:
- Campbell Soup Co. agreed to buy Sovos Brands Inc. in a deal valued at $2.7 billion, expanding the soupmaker’s presence in frozen meals and giving it a foothold in the pasta sauce market.
- Tyson Foods Inc. declined as it will shut down four additional chicken facilities after fiscal third-quarter sales trailed even the lowest of analyst estimates.
- Yellow Corp. fell as it filed for bankruptcy and will remain shuttered after the trucking firm’s long-running financial woes were compounded by a dispute with its labor force.
- Sage Therapeutics Inc. dropped after regulators granted approval to its fast-acting pill only for postpartum depression, denying the drug clearance for major depressive disorder.
Elsewhere, wheat rose after Ukraine used sea drones to cripple a Russian naval vessel and an oil tanker over the weekend, posing a risk for a key export route for Russian commodities through the Black Sea. West Texas Intermediate traded near $82 a barrel at the start of the week after rising more than 4% over the previous two sessions.
On the currency markets, the Bloomberg Dollar Spot Index was little changed, the euro was little changed at $1.1004, the British pound rose 0.3% to $1.2785 and the Japanese yen fell 0.5% to 142.46 per dollar.
🍝 For the dinner table debate:
The Latin American M&A market has been impacted by a series of local and international factors: financing problems, high interest rates, political uncertainty, among other factors. Thus, according to data compiled by Bloomberg, the mergers and acquisitions (M&A) segment in the region fell by 35.9% at the end of 2022 compared to 2021, in a period analyzed between January 2 and December 26.
Pooled public data show that during the period under analysis, the region saw deals worth US$106.9 billion, while in 2021 the figure rose to US$168.3 billion. Furthermore, the economic slowdown, political uncertainty and capital flow issues are also impacting the M&A segment so far this 2023: a recent survey conducted by LLYC in collaboration with iDeals and M&A Community showed that the aforementioned deals would only be recovering in 2024.
“Almost 50% of those surveyed believe that the recovery could come in 2024 and that it could be a record year for investment and the other 50% believe that it could be brought forward to the third and fourth quarter of this same year. However, all experts agree that the pause in this activity has been notorious and the reasons are related to a greater difficulty in accessing financing and its impact on prices,” Alejandra Aljure, Director of Operations at LLYC Colombia told Bloomberg Línea.
Paola Villar S, a content producer at Bloomberg Línea, and Rita Nazareth of Bloomberg News, contributed to this report
