July 10, 2019 / 7:48 PM / 10 months ago

EMERGING MARKETS-Pension reform hopes lift Brazil assets, dovish Fed powers Latam FX

 (Updates prices, adds quote)
    By Agamoni Ghosh
    July 10 (Reuters) - Expectations of passage of a landmark
pension reform bill in Brazil's lower house pushed Sao Paulo
stocks to historic highs on Wednesday, while Latin American
currencies benefited from a softer dollar after Fed chair Jerome
Powell's dovish comments. 
    MSCI's index of Latin American stocks rose
1.5%, outperforming the broader emerging market index
as heavyweight Brazil index hit a fresh record high.  
    The Bovespa rose more than 1% helped by optimism over the
pension reform bill, with the lower house of Congress set to
begin voting later in the day after a delay due to political
bargaining between the government and opposition lawmakers.
    Pension reform is the cornerstone of President Jair
Bolsonaro's economic agenda as he tries to bring the country's
public finances back to health, aiming to save the public purse
around 1 trillion reais ($263 billion) over the next decade.
    The real also rose over 1% while getting an
additional boost from Powell's comments, which bolstered
expectations for an interest rate cut from the U.S. Federal
Reserve this month.  
    Powell said the Fed was ready to "act as appropriate" to
sustain a decade-long U.S. economic expansion and pointed to
economic risks including persistently weak inflation, slowing
global growth and a downturn in business investment.
   Other regional currencies also rose with Chile's and
Colombia's pesos climbing between 0.4% and 0.6%.
Argentina's peso made nominal moves.  
    Mexican assets underperformed, with the peso falling
0.1%, adding to a loss of more than 1% on Tuesday after the
abrupt resignation of the country's finance minister Carlos
Urzua, who cited "extremism" in economic policy and conflicts of
interest with other members of the government as reasons for
    Mexican President Andres Manuel Lopez Obrador said Urzua had
differences with the president's chief of staff and businessman
Alfonso Romo. He appointed deputy finance minister Arturo
Herrera to replace him.
    "The reasons Urzua gave for his departure, such as
questionable policy decisions within the administration, will
raise questions over Mexico's fiscal credibility – especially at
a time when investors are examining the prospects for state
support of Pemex," Chris Turner, head of EMEA and LATAM research
at ING, said in a note. 

 Key Latin American stock indexes and currencies at 1925 GMT
 Stock indexes                        daily %
                             Latest    change
 MSCI Emerging Markets       1051.16     0.83
 MSCI LatAm                  2965.52     1.51
 Brazil Bovespa            105781.61      1.2
 Mexico IPC                 42833.83     0.04
 Chile IPSA                  5059.52     0.11
 Argentina MerVal           42747.71     2.38
 Colombia IGBC              13012.36     0.82
 Currencies                           daily %
 Brazil real                  3.7515     1.49
 Mexico peso                 19.1530    -0.13
 Chile peso                   684.95     0.62
 Colombia peso               3201.55     0.38
 Peru sol                      3.283     0.40
 Argentina peso              41.8200     0.07

 (Reporting by Agamoni Ghosh in Bengaluru
Editing by Sonya Hepinstall)
Nuestros Estándares:Los principios Thomson Reuters
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