May 8, 2020 / 2:25 PM / 19 days ago

EMERGING MARKETS-Latam markets rally; Argentina debt offer deadline eyed

    By Susan Mathew
    May 8 (Reuters) - Brazil's real firmed for the first time
this week, bouncing from last session's all-time lows, while
most other Latin American currencies also strengthened on Friday
on signs of easing tensions between the United States and China.
    Beijing said Sino-U.S. trade negotiators had agreed to
improve the atmosphere for the implementation of a Phase 1 deal,
days after President Donald Trump threatened to impose new
tariffs.
    "The last thing global investors need right now amid the
global coronavirus pandemic is a one-two punch from spiking
trade war risks," wrote Han Tan, market analyst at FXTM. 
    Data showing the U.S. economy lost fewer jobs in April than
feared due to the coronavirus crisis also lifted sentiment,
keeping the dollar at bay.
    Brazil's real rose 1.4% to 5.76 but the once
unthinkable 6.00 to the dollar was still in sight. The currency
plunged to new lows on Thursday after the central bank delivered
a deeper cut in interest rates than expected.
    The case for more cuts was made stronger on Friday by
official figures showing inflation in April plumbed over 20-year
lows.
    The U.S.-China optimism filtered through to commodity
markets, aiding gains in commodity-price reliant Latam markets.

    Currencies of Mexico, Colomabia and Chile
 all rose more than 1%.
    Stocks followed suit, with those in Brazil in the
lead. Sao Paulo's Bovespa index jumped 2% on broad-based
gains. Mexican shares rose 0.9%, while Chilean shares
 extended gains to a fourth straight session.    
    In Argentina, markets were filled with uncertainty as the
government's deadline for bondholders to agree to its debt
restructuring offer was only hours away.

    The twin economic and debt crises have driven a huge gap
between the Argentine peso's official rate, kept almost
static by capital controls, and tumbling black market and other
unofficial rates.
    Colombia's central bank had earlier this week said it
expects a contraction of between 2% and 7% in gross domestic
product this year due to pandemic-driven impact on productivity.

    Analysts at Credit Suisse expect a contraction of 4.1% 
    "We expect second quarter GDP data to be sharply down due to
the lockdown ... We don't expect a full rebound in the third
quarter that would compensate for the decline in the second
quarter, and there is a great deal of uncertainty regarding what
the next steps following the quarantine will be like." 
    
    Key Latin American stock indexes and currencies at 1401 GMT:
  Stock indexes           Latest   Daily %
                                   change
 MSCI Emerging Markets     910.52     1.52
                                   
 MSCI LatAm               1618.48     3.52
                                   
 Brazil Bovespa          79776.75     2.12
                                   
 Mexico IPC              37125.81     0.91
                                   
 Chile IPSA               4012.70     0.33
                                   
 Argentina MerVal               -        -
                                   
 Colombia COLCAP          1116.75      0.3
                                   
                                          
      Currencies          Latest   Daily %
                                   change
 Brazil real               5.7597     1.36
                                   
 Mexico peso              23.7120     1.35
                                   
 Chile peso                 827.8     0.85
                                   
 Colombia peso            3875.42     0.99
                                   
 Peru sol                  3.4017     0.00
                                   
 Argentina peso           67.2700    -0.12
 (interbank)                       
                                   
 
 (Reporting by Susan Mathew in Bengaluru; Editing by Steve
Orlofsky)
  
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