June 5, 2020 / 7:28 PM / a month ago

EMERGING MARKETS-Latam stocks surge, FX eyes record week as risk rally roars into gear

    * Latam stocks set to add more than 16% for the week
    * U.S. employment figures boost sentiment
    * Brazil's central bank has room to cut rates, official says

 (Adds details, updates prices)
    By Susan Mathew and Ambar Warrick
    June 5 (Reuters) - Latin American stocks were set for their
best week since 2008, while currencies eyed record weekly gains
as positive economic readings on Friday spurred widespread
buying amid hopes of a post-coronavirus recovery. 
    The MSCI's index of Latin American stocks
jumped nearly 4%, eyeing weekly gains of more than 16%, while
currencies rose 1.9% and were set to add nearly
7% for the week.
    Confounding estimates, data on Friday showed the U.S.
economy added more than 2.5 million jobs in May after suffering
record losses in the prior month, fueling expectations for a
swift recovery in the world's largest economy.
    The figures boosted Wall Street indexes, with regional
stocks following in tow.
    "It suggests the American economy can bounce back very
vigorously and we all need to massively revise up our economic
projections." said James Knightley, chief international
economist at ING.
    Still, he cautioned that the economy had a long way to go
before reaching pre-pandemic levels of activity.
    Brazil's real resumed its surge to gain nearly 3%,
breaching through the 5.00-per-dollar level for the first time
since March. The currency was set for its biggest weekly
gain since 2008.
    Crude exporter Mexico's peso jumped 1.2%, and
Colombia's currency scaled a three-month peak against the
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
    The reopening of several major economies across the globe
bolstered risk appetite through the week, enabling regional
assets to break out of a month-long trough brought about by
uncertainty over the pandemic.
    Chilean stocks led gains in the region with a 4%
    Brazil's Bovespa added more than 1% after central
bank economic policy director Fabio Kanczuk said the bank has
room to cut interest rates further into record-low territory to
mitigate the impact of the pandemic.
    "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 the Bovespa after its
sell-off in the first quarter. 
    Mexican stocks added 2.9%. A Reuters poll expects
inflation in the country to have accelerated in May due to price
pressures from processed foods and some agricultural services
and products.
    Key Latin American stock indexes and currencies:
    Stock indexes             Latest     Daily % change
 MSCI Emerging Markets         1003.29              1.47
 MSCI LatAm                    2048.94              3.24
 Brazil Bovespa               95046.39               1.3
 Mexico IPC                   38967.64              2.89
 Chile IPSA                    4039.32              3.96
 Argentina MerVal             45344.93             3.821
 Colombia COLCAP               1197.52              2.89
       Currencies             Latest     Daily % change
 Brazil real                    4.9869              2.87
 Mexico peso                   21.6390              1.34
 Chile peso                        769              0.33
 Colombia peso                 3572.38              0.22
 Peru sol                       3.4298              0.06
 Argentina peso                68.9800             -0.12

 (Reporting by Susan Mathew in Bengaluru;
Editing by Alistair Bell and Paul Simao)
Nuestros Estándares:Los principios Thomson Reuters
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