Latam FX start week on tepid note; resources stocks advance on China boost
EMERGING-MARKETS/LATAM (UPDATE 1):EMERGING MARKETS-Latam FX start week on tepid note; resources stocks advance on China boost
* Latam stocks up 1.2%, FX flat * Mexico's inflation at 4.55% YoY * Brazil economists see higher inflation despite rate hikes * El Salvador nears $1.3 bln IMF deal, report says * China to adopt appropriately loose policy By Pranav Kashyap and Johann M Cherian Dec 9 - Most Latin American currencies began the week on a cautious note ahead of a slew of economic data from the region, while main equity indexes got a lift from resources-heavy stocks on signs of policy support out of China. Brazil's real was last flat in choppy trading on Monday, as investors avoided big bets ahead of a central bank interest rate decision, with markets tilting in favor of a 100 basis points interest rate hike. A weekly poll showed that private economists have raised their forecasts for the country's benchmark interest rate for both this year and next, amidst rising inflation projections. The focus is now on Brazil's IPCA inflation index figures for November, with economists polled by Reuters expecting a slowdown in consumer inflation to 0.37% on a monthly basis. MSCI's index for Latin American currencies was flat. Mexico's peso edged up 0.1% at 20.17 to the dollar. Data showing a greater-than-expected easing in the country's 12-month headline inflation rate in November, buttressing expectations that the central bank will continue to reduce its benchmark interest rate at its meeting next week. "The fall in Mexico's headline inflation rate, combined with the relative resilience in the peso since the U.S. election means that Banxico is likely to press ahead with another 25 bps cut," said Kimberley Sperrfechter, emerging markets economist at Capital Economics. Still, markets are bracing for what U.S. President-elect Donald Trump's trade, security and immigration policies aimed at the country might be. The peso and the local stocks index is among top underperformers in the region. On the day the bourse added 1.7% and touched a one-month high. The Chilean peso firmed 0.7% as prices of top export commodity, copper rose a touch a one-month high. China's Politburo was quoted saying that it will adopt an "appropriately loose" monetary policy next year, the first easing of its stance in some 14 years, alongside a more proactive fiscal policy to spur economic growth. Further, the Chilean central bank reported that copper exports reached $4.22 billion in November, contributing to a trade surplus. Fellow copper exporter Peru's sol was pinned at a two-month high, while oil exporter Colombia's peso firmed 0.8% and hit a two-week high. On the equities front, MSCI's index tracking local stocks gained 1.2%, with Brazil's Bovespa up 1%, as miner Vale surged 5.6% and oil company Petrobras added 2.8% tracking upbeat crude and base metals prices. Argentina's Merval index rose 1.3%, with oil company YPF jumping 3.6%, while Chilean stocks added 1% and hit a more than one-month high. In Central America, El Salvador's dollar bonds maturing in 2030 and 2029 rose. A report said the country expects to reach a $1.3 billion loan agreement with the International Monetary Fund within two to three weeks in return for adjustments to its use of bitcoin as legal tender and reductions in government deficits. Key Latin American stock indexes and currencies: Latin American market prices from Reuters MSCI Emerging Markets 1114.59 0.86 MSCI LatAm 2023.29 1.22 Brazil Bovespa 127236.43 1.02 Mexico IPC 52203.05 1.66 Chile IPSA 6715.2 1 Argentina Merval 2231855.9 1.335 5 Colombia COLC 1380.76 0.27 Brazil real 6.0841 0.09 Mexico peso 20.1722 0.07 Chile peso 968.02 0.7 Colombia peso 4368.63 0.82 Peru sol 3.718 -0.05 Argentina peso 1015.5 -0.25 Argentina peso 1045 0.48
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First Published:10 Dec 2024, 01:45 AM IST
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