November 10, 2016 / 1:22 PM / 2 years ago

EMERGING MARKETS-Brazil real, Mexico peso stumble for 2nd day on Trump concerns

By Bruno Federowski
    SAO PAULO, Nov 10 (Reuters) - The Brazilian and Mexican
currencies stumbled for a second day on Thursday amid worries of
a potential trade shock under U.S. President-elect Donald Trump.
    The Chilean peso weakened less than its peers and Brazilian
stocks rose as Trump's promises of infrastructure spending
boosted prices of industrial metals.
    "We see a tug of war between the impact of higher policy
uncertainty ... and impactful pro-growth U.S. policies under
Trump," Credit Suisse analyst Shahab Jalinoos wrote in a report.
    The Mexican peso weakened 2.1 percent on Thursday after
tumbling 8 percent the day before, its worst one-day slide since
the 1994 Tequila Crisis.
    Trump had vowed, during his election campaign, that if
elected his administration would force Canada and Mexico to
renegotiate the North American Free Trade Agreement (NAFTA) with
the United States as part of what he says is an effort to
protect and restore American jobs.
    The Brazilian real slipped 2.6 percent, nearing 3.30
to the U.S. dollar for the first time in two months.
    Currency volatility drove Brazil's central bank to pause its
daily interventions for a second straight day on Thursday as it
assesses market conditions. 
    However, Brazil's benchmark Bovespa stock index rose
0.4 percent, supported by shares of miner Vale SA.
    Iron ore futures in China .IO62-CNI=SI surged 9 percent on
Thursday to hit a 30-month peak, as Trump's promises to invest
heavily in infrastructure helped it extend a recent rally.
    Copper prices also jumped, helping limit losses in
the Chilean peso to only 0.3 percent.
    Key Latin American stock indexes and currencies at 1300 GMT:
 Stock indexes                               daily %     YTD %
                                              change    change
 MSCI Emerging Markets               885.38     0.59     10.83
 MSCI LatAm                         2463.49    -1.23     36.31
 Brazil Bovespa                    63525.66     0.42     46.54
 Chile IPSA                         4310.06     0.34     17.11
 Chile IGPA                        21493.18     0.32     18.41
 Currencies                                  daily %     YTD %
                                              change    change
 Brazil real                         3.2930    -2.58     19.86
 Mexico peso                        20.2620    -2.08    -14.96
 Chile peso                             651    -0.31      9.02
 Argentina peso (interbank)         14.9200     0.34    -12.99
 Argentina peso (parallel)            15.33     0.59     -6.91
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