July 3, 2020 / 2:27 PM / a month ago

EMERGING MARKETS-Latam assets muted; Oil-linked currencies to outperform for week

    * Colombian, Mexican pesos lead weekly gains
    * Chilean stocks outperform for the week
    * Argentine assets sole losers for the week

    By Ambar Warrick
    July 3 (Reuters) - Latin American stocks and currencies were
muted on Friday as a U.S. holiday provided few trading cues, but
were set for weekly gains as bets grew for a recovery from the
economic effects of the COVID-19 pandemic. 
    Strong economic readings from China and the United States
through the week had helped bolster risk appetite, although a
drastic rise in coronavirus cases capped broader gains in risk
assets.
    Still, the positive news drove gains in commodity markets,
which in turn saw oil and metal-linked assets in Latin America
outperform for the week. It also helped regional risk assets
weather a raft of weak local economic data.
    The currencies of oil exporters Colombia and Mexico
 were set to outperform regional peers for the week,
riding on strength in the crude market as bets for demand
recovery grew.
    
    Brazil's real edged up for the day, while stocks
 inched lower after data showed that economic activity in
the country shrank in June for a fourth straight month due to
the coronavirus.
    The reading was slightly stronger than the prior month, as
Latin America's largest economy slowly ground back into gear
from coronavirus-related lockdowns.
    The real and Brazilian stocks were both set to add more than
2% for the week.
    Copper exporter Chile's stocks were set to
outperform regional peers for the week with a 4.8% gain. The
peso had also benefited from stronger copper prices
through the week.
    Still, economic activity in the world's largest copper
producer remained constrained due to the coronavirus.
    Investors continued to watch for increasing infections as
major economies scaled back virus-related curbs. While reopening
has helped economic activity recover, it also leaves the door
open for future lockdowns if infections continue to spike.
    "This is not a 'bubble, burst bubble, sort out bubble,
recover' cycle. This is an abrupt switching off of economies,
followed by a relatively abrupt switching back on. Companies and
consumers are not likely to react as they have in the past,"
wrote Paul Donovan, Chief Economist of UBS Global Wealth
Management.
    Argentine stocks and the peso were the sole
weekly losers in Latin America. Investors continued to fret over
the country's negotiations over the repayment of its distressed
bonds, with a deadline for a deal looming later in the month.
    Key Latin American stock indexes and currencies:
    
    Stock indexes             Latest       Daily % change
 MSCI Emerging Markets         1032.56                   0.89
                                        
 MSCI LatAm                    1943.51                   0.16
                                        
 Brazil Bovespa               96374.20                   0.14
                                        
 Mexico IPC                   37929.53                   0.09
                                        
 Chile IPSA                    4176.38                  -0.02
                                        
 Argentina MerVal                    -                      -
                                        
 Colombia COLCAP               1120.08                    0.1
                                        
                                                             
       Currencies             Latest       Daily % change
 Brazil real                    5.3395                   0.16
                                        
 Mexico peso                   22.4139                   0.23
                                        
 Chile peso                      800.5                   0.12
                                        
 Colombia peso                    3638                   0.16
 Peru sol                       3.5168                   0.11
                                        
 Argentina peso                70.6300                  -0.07
 (interbank)                            
                                        
 

    
 (Reporting by Ambar Warrick in Bengaluru
Editing by Alistair Bell)
  
Nuestros Estándares:Los principios Thomson Reuters
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