Latin American stocks, currencies rebound after recent losses
Mexico's peso to weaken further in medium term, poll shows
Rio paves way for new financial exchange to rival B3
Latin American stocks up 2.5%, currencies rise 1.2%
Updated at 03:32 p.m. ET/ 1932 GMT, adds analyst comment paragraph 9
By Johann M Cherian and Shristi Achar A
July 3 (Reuters) -Currencies and equities across most resource-rich Latin American countries rebounded from recent losses on Wednesday, as base metal prices ticked higher, but concerns around underlying macroeconomic issues lingered.
The MSCI index that tracks currencies in the region .MILA00000CUS added 1.2%, rebounding from a six-day losing streak.
The dollar weakened to a two-week low as the latest economic data fanned hopes of interest rate cuts later this year. USD/
Fed officials at their last meeting acknowledged the U.S. economy appeared to be slowing and that "price pressures were diminishing." They advocated for a wait-and-see approach before committing to interest rate cuts, according to minutes of the two-day gathering held on June 11-12.
Financial markets are focused on Friday's release of the monthly U.S. employment report for June, which could offer clues on the Fed's policy path.
"It's definitely some stabilization pretty much across the board. We're in this low volatility window and Friday's (U.S.) payrolls is going to be pretty important," said Padhraic Garvey, regional head of research for the Americas at ING Financial Markets.
Brazil's real BRL= jumped 1.8% after logging losses in five of the last six sessions, as prices of iron ore, a top export for the country, hit a four-week high, while investors assessed better-than-expected industrial production data for May.
Still, the currency hovered near two-year lows amid concerns about the country's fiscal stability. Brazil's finance minister said the government aims to present and approve a bill to renegotiate state debts with the federal government soon.
"We need to watch for whether this mini-crisis itself leads to a definitive change in policy direction, but an FX intervention alone won't be that curative, and isn't likely anyway," global strategists at Macquarie noted.
The currencies of Chile CLP= and Peru PEN=, the world's two largest copper producers, rose over 0.5% asprices of the red metal jumped. MET/L
Mexico's peso MXN= strengthened 0.4%. The currency on Friday logged its biggest quarterly drop since the pandemic and a poll showed it could remain weak in the medium term given political uncertainty at home and abroad.
Meanwhile, Argentina's government predicted a 3.5% economic contraction this year, in itsdraft version of the 2025 budget.
On the equities front, MSCI's index tracking regional bourses .MILA00000PUS rallied 2.5% to clinch a one-week high.
Brazil's heavyweight Bovespaindex .BVSP added 1%, underpinned by miner Vale's VALE3.SA 2.5%jump.
The city of Rio de Janeiro signed into law a bill that lowers taxes for the opening of a new financial exchange to compete with Sao Paulo's B3 B3SA3.SA. Shares of the exchange operator were last up 0.4%.
Key Latin American stock indexes and currencies:
Latin American market prices from Reuters | ||
Stock indexes | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1093.13 | 1.24 |
MSCI LatAm .MILA00000PUS | 2212.72 | 2.47 |
Brazil Bovespa .BVSP | 126046.34 | 1.01 |
Mexico IPC .MXX | 52770.84 | 1.58 |
Chile IPSA .SPIPSA | 6513.78 | 2.01 |
Argentina MerVal .MERV | 1599192.68 | -2.131 |
Colombia COLCAP .COLCAP | 1385.16 | 0.11 |
Currencies | Latest | Daily % change |
Brazil real BRBY | 5.5626 | 1.85 |
Mexico peso MXN=D2 | 18.1780 | 0.39 |
Chile peso CLP=CL | 942.4 | 0.62 |
Colombia peso COP= | 4101.5 | 0.50 |
Peru sol PEN=PE | 3.7892 | 0.50 |
Argentina peso (interbank) ARS=RASL | 913.5000 | 0.11 |
Reporting by Johann M Cherian and Shristi Achar A in Bengaluru; Editing by Paul Simao and Rod Nickel
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