Joint
Today, the American stock market consolidated a positive session, while European stocks closed in negative territory, and bond yields showed mixed performance. The European stock market's performance is linked to the threat of economic damage from new trade restrictions, while the American market was boosted by news of progress in the development of the Covid-19 vaccine.
In the US, markets managed to sustain last week's rally thanks to a return to normal economic activity. Among the news related to the day's trading rebound was the nomination of former Federal Reserve Chair Janet Yellen as Treasury Secretary for the Joe Biden administration. Additionally, vaccine progress in recent weeks continues to drive the risk-on environment in the markets, and investors have acquired greater amounts of assets, providing support for the negative outlook for the virus's spread across the country. In the US economic calendar, preliminary purchasing management indicators were published across different sectors (manufacturing, composite, and services). Those that remain above the market consensus are the manufacturing and services sectors, while the composite remains in a sideways channel.
Fixed rent
The bond market in developed countries ended the session in mixed territory. In the United States, long-term Treasury yields rose, with the 10-year bond rate increasing 2.6 bps to 0.855%, as risk appetite spread across the US market following the progress of Covid vaccines and awaiting the Fed minutes. German Bunds performed contrary to US bonds, where the 10-year yield fell 0.2 bps to -0.58%. Amid a more resilient market in response to vaccine news and mixed economic indicators, amid an increase in the manufacturing PMI and a decline in the services PMI, this creates a backdrop of uncertainty for the European economy's progress amid the second wave of contagion. Similarly, the UK 10-year Gilt yield fell 0.2 bps to 0.317%, influenced by tensions surrounding Brexit negotiations, where significant gaps remain as the deadline approaches. However, the country reported improved PMIs, which influenced investment in UK bonds.
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Variable income
The COLCAP index closed at the beginning of the week at 1,247.94 points, up 0.66%. As a note of interest, the Colombian Stock Exchange signed an agreement to sell its stake in its technology subsidiary, Sophos. It should be noted that Sophos was the subsidiary generating the most revenue for the BVC. However, the company stated that this was due to the desire to strengthen its core business and market liquidity. Sophos was sold for almost four times its value. Thus, the BVC's share price positively discounted the sale, registering a price of $11,100, 1.83% above expectations. As for Ecopetrol, the oil company was the first to sign the contract for fracking pilots with the National Hydrocarbons Agency. The pilot projects will begin next year and will be carried out at the Kale project, located in the middle Magdalena Valley.
Money Exchange
The Colombian peso (COP) depreciated 0.46%, reaching 3,647.55 pesos per dollar, where US$925 million was traded. This was due to an influx of US dollar buyers, following the results of the US manufacturing and services PMI, which boosted demand for the safe-haven currency. Meanwhile, the positive performance of crude oil prices limited the local currency's losses. The pair ultimately reached a high of COP$3.648,80 and a low of COP$3.608,00. The current Representative Market Rate for Tuesday will be COP$3,633.
US stocks closed higher after midterm election results came in line with market expectations. Democrats will retain control of the US House of Representatives, giving them political control over President Trump, while Republicans have gained control of the Senate. With this reduced uncertainty, markets reacted positively.
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