May 2, 2019 / 9:30 PM / a year ago

EMERGING MARKETS-Latam stocks, FX weaken after Fed dampens rate cut bets

 (Updates prices, adds quote)
    May 2 (Reuters) - Latin American currencies softened against
a stronger U.S. dollar on Thursday, a day after the U.S. Federal
Reserve kept interest rates steady, while most regional stock
markets broadly fell along with their global peers.
    Regional markets, returning from the Labour Day holiday,
were also pressured by declining crude prices hurting energy
stocks and currencies of oil exporters.
    Fed Chair Jerome Powell on Wednesday signaled little
appetite to adjust interest rates anytime soon. This
disappointed some market participants who had hoped for a more
dovish stance as it reduced the possibility of a rate cut in the
near future, said Dan Kawa, a strategist at TAG Investimentos.
    Brazil's real slid 1.2%. Data on Thursday showed
growth in Brazilian manufacturing activity slowed in April to
its weakest pace in six months.
    Stocks in Sao Paulo dropped 0.9%, weighed by losses
across most sectors.
    Prices of some local stocks adjusted for moves seen in their
corresponding American depository receipts (ADR) on Wednesday,
when equities in Sao Paulo did not trade due to a holiday for
Labor Day. 
    Local shares of iron ore miner Vale SA fell 2.3%,
following Wednesday's 3.1% slide in its ADR.
    State-run oil firm Petroleo Brasileiro SA (Petrobras) saw
its shares fall more than 1% amid a slide
in oil prices and a 2% fall on Wednesday in Petrobras'
    The Mexican peso softened 0.7%. The high-yielding
currency is popular among carry traders, who invest in it using
funds borrowed in low interest rate currencies, pocketing the
    The peso has been broadly weaker over the past two weeks.
Simon Harvey, an FX market analyst at Monex Europe, said the
emerging market carry trade was "starting to seem like a crowded
    InColombia, the peso weakened 0.7%, while stocks
 slid 0.9%. Energy firm Ecopetrol SA lost 1.3%,
hit by weaker oil prices. 
    Declining copper prices knocked the Chilean peso,
down for the eight session in nine. The currency slipped half a
percent to its lowest since late March on the day.
    Chile stocks fell to their lowest in four
    Argentina's troubled peso softened, while stocks
 surged almost 4.2%, with all companies within the index
in positive territory.
     Emerging market countries need to expand their currency
crisis fighting toolkits and be ready to embrace the kind of
money printing tactics used in the U.S., Europe and Japan, the
head of the Bank for International Settlements (BIS) said on
    Key Latin American stock indexes and currencies at 2100 GMT:
    Stock indexes             Latest    Daily %
 MSCI Emerging Markets         1078.95     -0.14
 MSCI LatAm                    2713.72     -1.94
 Brazil Bovespa               95527.62     -0.86
 Mexico IPC                   44312.43     -0.64
 Chile IPSA                    5141.58     -0.88
 Argentina MerVal             30817.01      4.21
 Colombia IGBC                12659.99     -0.92
       Currencies             Latest    Daily %
 Brazil real                    3.9654     -1.16
 Mexico peso                   19.1145    -0.705
 Chile peso                      681.2     -0.68
 Colombia peso                    3256      0.68
 Peru sol                         3.31     -0.12
 Argentina peso                44.7500     -1.03

 (Reporting by Susan Mathew in Bengaluru; editing by Diane
Nuestros Estándares:Los principios Thomson Reuters
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