August 8, 2019 / 7:59 PM / 3 months ago

EMERGING MARKETS-Latam stocks, FX rally as growth slowdown fears ease slightly

 (Updates prices)
    By Susan Mathew
    Aug 8 (Reuters) - Latin American currencies and stocks
joined a global rally on Thursday as surprisingly upbeat
economic data from the United States and China allied with hints
that Beijing will step in to limit losses in the yuan, to ease
growth worries for now.
    Brazil's real firmed more than 1%, while Mexico's
peso rose almost as much against a slightly firmer
dollar. Colombia's peso surged 2.3% on coming back after
a day's holiday, and was set for its best session in two months.
 
    Most regional stock markets also rose, between 0.1% and 2%,
with those in Brazil and Mexico on course for
their third straight day of gains. 
    Data on Thursday showed that in China, trade was stronger
than expected in July, while in the United States, the number of
Americans filing applications for unemployment benefits last
week unexpectedly fell, pointing to a robust U.S. labour market.

    The data sets allayed some fears that a bruising trade war
between the two countries would tip the world into a recession.
That tied in with China's yuan firming against the dollar as its
central bank signaled it could step in to plug the currency's
fall.    
    As worries about the trade war and its consequent impact on
reach a fever pitch, markets worldwide have seen volatile
sessions, with Latam markets being no exception.
    In Mexico, data showed annual inflation rate slowed for
third month, keeping alive chances of a rate cut at the central
bank's meeting next week.
    However, TD Securities sees the bank holding steady on rates
at the August meeting, and expect to see dovish tilts in the
statement. 
    Their call remains for a cut in the first quarter of next
year, but should the next two months of inflation data show core
dynamics and inflation expectations better contained, they see a
potential for cuts late this year.
    Rating agencies added to Latam's dour outlook, with Moody's
saying higher costs and trade tensions are undermining Mexico's
growth prospects, while Fitch said significant challenges still
remain for Brazil and more reforms besides a far-reaching
pension reform are needed to stabilize the government's debt
burden.
    Higher copper prices supported Chile's currency as
well as stocks which rose 2% and were set for their
best day in nine months. Copper is Chile's main export. 
  
    
    Key Latin American stock indexes and currencies at 1950 GMT:
    Stock indexes             Latest    Daily %
                                         change
 MSCI Emerging Markets          985.30       1.3
                                        
 MSCI LatAm                    2776.43      2.25
                                        
 Brazil Bovespa              104040.74      1.22
                                        
 Mexico IPC                   40472.34       0.1
                                        
 Chile IPSA                    4907.51         2
                                        
 Colombia IGBC                12563.65      1.91
                                        
                                                
       Currencies             Latest    Daily %
                                         change
 Brazil real                    3.9238      1.29
                                        
 Mexico peso                   19.4579      0.84
                                        
 Chile peso                      708.8      0.73
                                        
 Colombia peso                 3366.33      2.35
 Peru sol                        3.373      0.44
                                        
 Argentina peso                45.2000      0.86
 (interbank)                            
                                        
 
 (Reporting by Susan Mathew in Bengaluru;
Editing by Marguerita Choy)
  
Nuestros Estándares:Los principios Thomson Reuters
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