EMERGING MARKETS-Latam markets slide as U.S. data weigh
SAO PAULO, Oct 15 (Reuters) - Latin American financial markets sank on Wednesday after weak U.S. data stoked global economy worries and sapped demand for higher-risk emerging market assets. Brazil's real and Mexico's peso both weakened against the dollar, while the MSCI Latin American stock index was headed for its worst one-day drop since June 2013, mostly due to the sharp fall in Brazilian shares. Data on Wednesday showed U.S. retail sales declined in September while producer prices fell, casting a pall over hopes for a stronger recovery in the world's largest economy. Latin American assets fell alongside global equities markets as investors moved into safer securities such as European government bonds. Brazil's Bovespa stock index sank nearly 4 percent with shares of state-run oil producer Petroleo Brasileiro SA , known as Petrobras, down 6 percent. Traders said part of the day's decline was due to profit-taking following a recent rally. The Bovespa rose 4.9 percent over the previous two sessions, driven by enthusiasm over the election chances of market-friendly presidential candidate Aecio Neves. Traders said the expiration of index futures contracts on Wednesday was also behind the drop as heavily-weighted shares weighted on the Bovespa index as a whole. Mexico's IPC stock index, which tends to track the economic outlook of the United States - the country's biggest trading partner - dropped about 1 percent. In currency markets, the Brazilian real weakened past 2.44 per dollar for the first time in over a week. Part of the decline was based on expectations for electoral polls due to be released after market close, traders said. Investors believe a Neves victory would instill market confidence in Brazil's economy and spur higher demand for local assets, while a win by President Dilma Rousseff would have the opposite effect. Brown Brothers Harriman analysts see technical support for the real near 2.40 and 2.35 per dollar below that, with resistance near 2.45 and 2.50, according to a client note on Wednesday. Elsewhere in Latin America, Chile's peso was little changed, while the Mexican peso touched its weakest level in nearly nine months. "(Mexico's peso) was of course meant to benefit the most from U.S. strength and is therefore a natural underperformer," Citi analyst Dirk Willer wrote on Wednesday. Key Latin American stock indexes and currencies at 1602 GMT: Stock indexes Latest Daily YTD pct pct change change MSCI Emerging Markets 982 -1.02 -1.06 MSCI LatAm 3,155.73 -3.78 2.46 Brazil Bovespa 55,818.11 -3.79 8.37 Mexico IPC 42,772.68 -0.94 0.11 Chile IPSA 3,802.34 -1.14 2.79 Chile IGPA 18,699.85 -0.97 2.59 Argentina MerVal 9,518.71 -3.79 76.57 Colombia IGBC 12,737.45 -1.1 -2.55 Peru IGRA 15,581.99 -0.22 -1.09 Venezuela IBC 3,028.79 4.77 10.68 Currencies Latest Daily YTD pct pct change change Brazil real 2.4375 -1.58 -3.31 Mexico peso 13.5623 -0.85 -3.92 Chile peso 588 -0.05 -10.53 Colombia peso 2,059.09 -0.51 -6.17 Peru sol 2.907 -0.14 -3.92 Argentina peso 8.4750 -0.03 -23.39 (interbank) Argentina peso 14.6 1.16 -31.51 (parallel) (Reporting by Asher Levine, editing by G Crosse)
© Thomson Reuters 2016 All rights reserved.