chilean Stock Market Gains Amidst Global Mixed Signals, Rate Cut Expectations
Chile‘s IPSA index demonstrated a positive performance today, slightly exceeding forecasts, though revised down from previous series. Market expectations remain focused on a 25 basis point cut to the Central Bank of Chile’s official rate in mid-month.BICE Inversiones’ latest recommended portfolio highlights potential for growth, including a 1.4% allocation to ILC, citing monetary stimulus, profit reactivation, and anticipation of a potential shift in the political cycle as supporting factors. The firm believes ther’s room for revaluation as Chile returns to valuation levels seen in the previous decade, potentially driven by capital repatriation and improved economic expectations.
Globally, stock markets presented a mixed picture. While the Chilean market initially moderated earlier declines mirroring Wall Street, it ultimately failed to fully recover. US markets closed lower: the Dow Jones fell 0.9%, the S&P 500 dropped 0.5%, and the Nasdaq declined 0.4%. This downturn was exacerbated by a significant 6.2% fall in Bitcoin’s value.
European markets showed more stability, with the Euro Stoxx 50 remaining unchanged and the FTSE 100 down a modest 0.2%. Asian markets were divergent; the Japanese Nikkei fell 1.9%, while Chinese markets saw gains, with the CSI 300 rising 1.1% and the Hong Kong Hang Seng increasing by 0.7%.
Investors are now looking ahead to a panel discussion featuring Federal Reserve President Jerome Powell at the Hoover Institution for potential insights into future monetary policy. The market largely anticipates another 25 basis point rate cut from the Fed on December 10th, reflected in rising US market rates for maturities exceeding six months.
Oppenheimer Asset Management’s John stoltzfus suggests a positive market reaction to a December rate cut, and anticipates further cuts in 2026 if economic data indicates slowing inflation or rising unemployment.
Recent economic data provided mixed signals. The November ISM manufacturing index, while indicating a ninth consecutive month of contraction (below 50 points), showed a stabilization in the prices paid subindex. market participants are also awaiting the release of data delayed by the recent government shutdown, alongside the upcoming service sector indicator from the ISM on Wednesday.
Stoltzfus cautioned against premature rate cuts, warning they could reignite inflationary pressures, which remain above the Fed’s 2% target, currently fluctuating between 2.8% and 3%. Despite eleven rate hikes, fourteen pauses, and five cuts to date, the US economy has so far avoided a recession.
