CE100™ Index rises 2.8% as a block, Mercado Libre rebounds

Call it the great stock market rally of 2022: US stocks rallied from record lows last week after investors looked beyond Russia’s attack on Ukraine.

PYMTS’ CE100^TM The index rose 2.8% last week, after losing 10 points on Wednesday. Meanwhile, the S&P 500 and the Nasdaq recovered from earlier losses to finish higher, with the Dow, posting its worst day of the year, rising 1.8% again.

Payment technology and consumer stocks led the rally in the CE100 Index, even as key travel stocks saw a significant drop.

Figure 1. Behavior of market indices during the week of February 22

CE100^TM Index of best and worst artists of the week

PYMNTS evaluated the share prices of all companies in the CE100 Index between February 21 and 25, 2022, to identify the best and worst performing companies for the week. This is what we found:

• Block: Shares of Square’s parent company jumped 27.4% after the company’s earnings, net income and gross payment volume beat analyst estimates in the fourth quarter, making it the company with the best performance in the CE100 index. The growth in the company’s stock performance came despite slowing usage of its Cash App and limited guidance for its recently acquired buy now, pay later (BNPL) firm, Afterpay.
• Free market: The Latin American e-commerce giant reported a 74% year-over-year increase in its fourth-quarter revenue, leading to a 25.2% improvement in its stock value last week. Still, the company faces a long way to recoup its earlier losses, as its shares are down 35.13% year-to-date.
• stock reservation: The giant OTA had the worst performance of the week as its shares fell 13%. The decline in its share value came despite the company beating fourth-quarter earnings estimates, with revenue up 141% compared to the same quarter a year earlier. The company expects continued volatility due to rising geopolitical tensions and uncertainty surrounding the impact of COVID-19 on the travel industry.
• BowX Acquisition Corporation (WeWork): The shared workspace company was another underperformer in the CE100 index, with its share value falling 7.2% last week. Nearly a year and a half after the company went public, its shares closed at an all-time low of $6.17 a share last Friday. The drop in share value comes at a time when co-founder Adam Neumann, who was ousted from his chief executive role in 2019, will soon have the rights to return as an observer on the company’s board, which is currently lacking. of president.

How the 10 Pillars of the Connected Economy Performed

The connected economy is broadly made up of 10 pillars, each of which defines how consumers and businesses interact with each other. These pillars are supported by enablers that offer the technology and infrastructure that drive these interactions.

PYMNTS analysis shows that Shop was the best performing pillar last week, with its sub-index seeing a strong rebound from the previous week, when it was the worst performing pillar. The value of the Store pillar sub-index increased by 6.6% last week, after a 5.4% drop between February 14 and 18.

The increase in the value of the index was led by Mercado Libre and Coupang, which saw a 25.2% and 14.1% increase in the value of their shares last week. This potentially indicates that the proliferation of digital shopping in the Latin American market could continue to drive e-retail growth in the future, especially as internet penetration is expected to reach 79% of the population by 2025.

However, it is worth noting that the Store sub-index has seen the steepest decline among all pillars of the connected economy since the beginning of the year. The index has fallen 22.1% since January 3.

Figure 2: Performance of the 10 pillars of the connected economy during the week of February 22

If we take into account the performance of all the pillars of the CE100 index in the last two months, the bank pillar ranks first.

Its performance has been boosted by Japan’s MUFG bank, which powers cross-border banking and payments for businesses globally. MUFG shares have risen 13.5% so far this year. Ally Bank is another player contributing to the growth of the pillar, with its shares improving 4.6% since the beginning of the year.

The growth in the banking pillar came as US Treasury yields hit their highest level since November 2019, with expectations that the Federal Reserve will tighten monetary policy in 2022 at a much faster pace than anticipated. previously.

Move, which was the only pillar to see growth during the week of February 14, was the worst performing pillar last week. Shares of Booking Holdings (-13%) and Airbnb (-6.1%) detracted from the mainstay’s performance as the Russian invasion of Ukraine is curbing cross-border travel.

Case in point: Kayak.com’s flight search data indicates that international travel searches dropped by 8 percentage points overnight shortly after Russia launched an attack on Ukraine, the steepest drop in months.

However, Booking Holdings, Kayak’s parent company, remains optimistic about pent-up demand for summer travel. In an interview last week, the company’s CEO, Glenn Fogel, noted that consumers are unlikely to cancel their travel plans despite the volatile situation in Europe.

“Certainly, we are in a very inflationary situation right now. And people know that if they’ve bought something right now, they’d be worried about canceling it from time to time and possibly having to rebook it at a higher price in the future,” Fogel said. “So I think they’ll be hesitant to get rid of travel bookings they’ve already made, because they’ll want to make sure they’ve gotten the best price.”

Whats Next

Stock markets around the world are likely to see wild fluctuations in asset prices as President Biden announced plans to block major Russian banks from the SWIFT international payments system on Saturday.

“Many traders were more or less convinced that the US and Europe were not taking a tough stance,” said Edward Moya, senior market analyst at OANDA. “This action is going to be really hard to digest and will really upset a lot of investors. … A lot of the rebound that we saw in the second half of last week will be tested.”

While the ban largely spares energy companies in Russia, which are key suppliers to Europe, it is still likely to result in high volatility in the European stock market. Trade between the US and Russia, on the other hand, is relatively insignificant and therefore unlikely to cause a major impact.