June 5, 2020 / 2:28 PM / a month ago

EMERGING MARKETS-Latam stocks, FX surge amid risk rally; Brazil's real jumps 3%

    By Susan Mathew
    June 5 (Reuters) - Latin American currencies rallied on
Friday, with a surge in oil prices lifting Mexican and Colombian
pesos, while an unexpected fall in U.S. unemployment rate
brought back hopes of a swift economic recovery.  
    Brazil's real resumed its surge, up 3%, breaching
through 5.00 per dollar for the first time since March. The
currency was on-track for its biggest weekly gain since
2008.
    Crude exporter Mexico's peso jumped 1.3%, and
Colombia's currency scaled a three-month top against a
stronger dollar, as oil prices surged ahead of an OPEC+ meeting
regarding output cuts.
    Chile's peso hit highs not seen since January as
prices of its main export item, copper, surged to early March
highs.
    Risk appetite got a boost this week from an increasing pick
up in business activity and steady stimulus flow from
governments and central banks. 
    Confounding expectations, data on Friday showed the U.S.
economy added jobs in May after suffering record losses in the
prior month.
    "It suggests the American economy can bounce back very
vigorously," said James Knightley, chief international economist
at ING, but cautioned against exuberance as many businesses
still remain shut while others have found ways to function with
limited staff. 
    Wall Street rallied and regional stocks followed with vigor.

    Brazil's Bovespa jumped 3% to a three-month top
driven by financials. Stocks in Mexico Chile
and Colombia all climbed more than 2%. 
    "Emerging-market equities in most regions offer an
attractive absolute and relative risk/reward profile," said
Brian S. Freiwald, portfolio manager at Putnam Emerging Markets
Equity Fund, adding that lower global interest rates provide an
additional tailwind. 
    Freiwald sees opportunities for Bovespa after its sell-off
in the first quarter. 
    But with U.S.-China trade tensions still simmering and many
developing world countries still report worrying number of daily
rise in COVID-19 infections and deaths, an economic recovery
still remains fragile, especially in Latam economies which were
already struggling before the pandemic. 
    
    Key Latin American stock indexes and currencies at 1407 GMT:
  Stock indexes           Latest   Daily %
                                   change
 MSCI Emerging Markets    1003.81     1.52
                                   
 MSCI LatAm               2071.01     4.35
                                   
 Brazil Bovespa          96646.79        3
                                   
 Mexico IPC              38870.68     2.63
                                   
 Chile IPSA               3970.85      2.2
                                   
 Argentina MerVal               -        -
                                   
 Colombia COLCAP          1189.06     2.17
                                   
                                          
      Currencies          Latest   Daily %
                                   change
 Brazil real               4.9776     3.06
                                   
 Mexico peso              21.6619     1.23
                                   
 Chile peso                 762.2     1.22
                                   
 Colombia peso            3553.58     0.75
                                   
 Peru sol                  3.4177     0.41
                                   
 Argentina peso           68.9800    -0.12
 (interbank)                       
                                   
 
 (Reporting by Susan Mathew in Bengaluru;
Editing by Alistair Bell)
  
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