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Brazil stocks brush off S&P downgrade; Mexican peso recovers


Reuters

Brazil stocks brush off S&P downgrade; Mexican peso recovers


By Bruno Federowski

SAO PAULO, Jan 12 (Reuters) - Brazil's benchmark index remained flat on Friday to hew close to its recent record high, shrugging off a sovereign ratings downgrade by Standard & Poor's, while Mexico's peso gained on market optimism that key trade talks will continue.

S&P on Thursday cut Brazil's credit rating deeper into junk territory as doubts grew about a presidential election in October and a push to trim its costly pension system.

Investors see the pension overhaul, a landmark proposal of President Michel Temer, as crucial to curtailing public debt and safeguarding long-term economic growth.

Some said the downgrade could help Temer pressure lawmakers into approving the plan to avoid further damage.

"The government will certainly use this downgrade to pressure Congress, though it is still highly uncertain whether it will be successful in doing so," analysts at Coinvalores brokerage wrote in a client note.

Equities in real estate and utilities were among the decliners on Brazil's benchmark Bovespa stock index while the real remained flat.

The Mexican peso strengthened 1.13 percent, helped by comments from U.S. President Donald Trump published Thursday that he would be "flexible" on his threat to withdraw from the North American Free Trade Agreement (NAFTA) because Mexico faces a presidential election in July.

"Trump's statements helped the Mexican currency to cut losses and reach its best level yet in 2018. Investors now believe that the NAFTA renegotiation process will continue," CI Bank said in a report.

The next round of negotiations will take place later this month.

Mexico's benchmark IPC index gained slightly, partially pushed by bank Grupo Financiero Banorte, whose shares rose 2.74 percent.

Key Latin American stock indexes and currencies at 2050 GMT:

Stock indexes

Latest

Daily pct change

YTD pct change

MSCI Emerging Markets

1,209.71

1.06

3.33

MSCI LatAm

2,990.31

0.96

4.73

Brazil Bovespa

79,349.12

-0.02

3.86

Mexico IPC

49,141.69

0.7

-0.43

Chile IPSA

5,733.35

0.27

3.03

Chile IGPA

28,829.85

0.26

3.03

Argentina MerVal

32,762.66

2.13

8.97

Colombia IGBC

11,623.57

-0.22

2.22

Venezuela IBC

1,649.36

18.57

30.58

Currencies

Latest

Daily pct change

YTD pct change

Brazil real

3.2058

-0.03

3.35

Mexico peso

19.0590

1.13

3.36

Chile peso

602.86

0.40

1.96

Colombia peso

2,859.55

-0.23

4.28

Peru sol

3.216

0.06

0.65

Argentina peso (interbank)

18.6800

0.16

-0.43

Argentina peso (parallel)

19.49

-0.41

-1.33




This article appears in: World Markets , Economy , US Markets , Stocks


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