June 21, 2019 / 8:11 PM / 4 months ago

EMERGING MARKETS-Brazil and Argentine currencies rise in catch-up rally

 (Updates prices)
    By Susan Mathew
    June 21 (Reuters) - While worries over tensions between U.S.
and Iran kept some Latin American assets pressured on Friday,
Brazil's stocks scaled a record high and its currency firmed in
a catch-up rally, while Argentina's peso hit a two-month high. 
    Sentiment globally took a hit after U.S. President Donald
Trump called off a military attack on Iran at the last minute.
The attack was meant to be in retaliation to the downing of an
unmanned U.S. drone on Thursday.
    Stocks in Mexico, Chile and Colombia
 slipped between 0.1% and 0.6%.
    Among currencies, Mexico's peso slipped 0.5%, falling
for the first time in four days, while Chile's currency
was flat against a weaker dollar.
    The Mexican peso is set to log a rise of 0.3% over the week.
    Colombia's peso slipped 0.4% after three days of
gains. 
    Colombia's central bank on Friday kept the benchmark rate
unchanged at 4.25%, as expected, in a bid to boost the economy
ahead of what it said would be a temporary rise in inflation.

    
    HOLIDAY CATCH-UP
    Returning from a holiday on Thursday, Brazil stocks
soared 1.71% to an all-time high and the real touched a
three month peak, up 0.5%, as they caught up with the Fed-fueled
rally that had boosted broader markets a day earlier.
    However, shares of airline Gol Linhas Aereas and
its loyalty program Smiles Fidelidade dipped more
than 2% each.
    Smiles on Friday said Gol would adjust standard ticket and
air miles pricing. Earlier this week, Gol had failed to reach a
deal to buyout Smiles.
    The real was set to post a weekly gain of about 2%, while
the Bovespa was set for a 4% gain over the week. 
    Also returning from a holiday, in Argentina the peso
rose 1.3% and the Merval stock index climbed 1.4%.
    Argentina's Treasury said on Friday that the country posted
its biggest monthly primary fiscal surplus in eight years in
May, from a deficit of 7.8 billion pesos a year ago.

    In the coming week, investors will be keenly watching for
the outcome of a meeting between the presidents of the United
States and China to discuss trade on the sidelines of the G20
summit in Japan.   
    "Our base case is that the G20 meeting between Presidents Xi
and Trump will bring a constructive result, opening the door to
a resumption of formal trade negotiations. However, we believe
much optimism is already priced in," analysts at TD Securities
said in a note.
    
    Key Latin American stock indexes and currencies at 1948 GMT:
 
    Stock indexes             Latest    Daily %
                                         change
 MSCI Emerging Markets        1,054.44      0.06
                                        
 MSCI LatAm                   2,875.88      1.29
                                        
 Brazil Bovespa             102,019.95      1.71
                                        
 Mexico IPC                  43,424.48     -0.51
                                        
 Chile IPSA                   5,056.40     -0.09
                                        
 Argentina MerVal            40,418.82       1.4
                                        
 Colombia IGBC               12,556.92     -0.56
                                        
                                                
       Currencies             Latest    Daily %
                                         change
 Brazil real                    3.8167      0.86
                                        
 Mexico peso                   19.1120     -0.61
                                        
 Chile peso                      683.7     -0.04
                                        
 Colombia peso                3,197.43     -0.29
 Peru sol                          3.3      0.30
                                        
 Argentina peso                42.7900      1.40
 (interbank)                            
                                        
 

 (Reporting by Susan Mathew in Bengaluru; Editing by Rosalba
O'Brien)
  
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