June 29, 2020 / 8:35 PM / 4 days ago

EMERGING MARKETS-Latam markets muted even as Brazil's real bounces

    * Brazil industrial confidence posts record rise in June
    * Argentina economic activity plunges record 26.4% in April 
    * Colombian, Chilean stocks markets closed on Monday

 (Adds comments, updates prices)
    By Shreyashi Sanyal and Ambar Warrick
    June 29 (Reuters) - Brazil's real recovered from three
sessions of sharp losses on Monday, while broader Latin American
markets kept to the sidelines as a global rise in COVID-19 cases
dampened sentiment.
    The real was supported by data showing Brazilian
industrial confidence rebounded sharply in June, the biggest
rise ever. Still, the readings were consistent with levels seen
in severe recession.
    Another piece of data showed Brazil's economy lost 331,901
formal jobs in May but less than half the previous month's
record loss due to the COVID-19 crisis, suggesting the worst may
be over.
    The country also reported a record budget deficit for May as
the pandemic hammered tax revenues and triggered a surge in
government spending.
    Rising coronavirus cases in the United States rattled hopes
for a smooth emergence from pandemic-related lockdowns, while
the possibility of new lockdowns looked to upset already
precarious economic growth. 
    "The number of new COVID-19 cases is rising rapidly, and
there are doubts whether the global economy will really see the
V-shaped recovery many market participants are expecting to
happen," said Milan Cutkovic, a market analyst at AxiCorp. 
    With cases in Latin America also spiking exponentially,
investors were hesitant to capitalize on momentary weakness in
the dollar by buying into regional currencies. 
    Mexico's peso fell about 0.2%. The country reported
more than 4,000 new cases on Sunday.
    Latin American stocks and currencies had marked a third
straight week of losses as markets weighed increasing COVID-19
cases against the possibility a swift economic recovery from the
    Regional risk assets now appeared to be sticking to a tight
trading range, in anticipation of further progress against the
COVID-19 outbreak.
    "With global Covid-19 cases breaching the 10 million level
over the weekend, and global deaths exceeding half a million,
early re-openings are looking as misguided as they always did,
and threaten to send some countries/states back to re-closure,"
ING economists wrote in a note.  
    The BlackRock Investment Institute on Monday downgraded
emerging market equities to "underweight," citing uncertainty
over the pandemic and concerns central banks may have limited
room to respond appropriately.
    In Argentina, economic activity plunged 26.4% in April, the
worst monthly fall on record as the country reeled from the
impact of the pandemic and a nationwide lockdown.
    Colombian and Chilean markets were closed for a holiday.
    Key Latin American stock indexes and currencies at 2015 GMT:
 Stock indexes          Latest      Daily %
 MSCI Emerging             994.28       -0.46
 MSCI LatAm               1893.39           2
 Brazil Bovespa          95415.68        1.69
 Mexico IPC              37760.95        0.88
 Chile IPSA               3990.95       -1.17
 Argentina MerVal        40299.64      -0.715
 Colombia COLCAP          1110.65       -1.28
    Currencies          Latest      Daily %
 Brazil real               5.4142        0.18
 Mexico peso              23.0780       -0.13
 Chile peso                 819.4        0.00
 Colombia peso            3753.93       -0.16
 Peru sol                  3.5278        0.00
 Argentina peso           70.3900       -0.24
 Argentina peso               125        3.20
 (Reporting by Shreyashi Sanyal and Ambar Warrick in Bengaluru;
Editing by Andrea Ricci and Tom Brown)
Nuestros Estándares:Los principios Thomson Reuters
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