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EMERGING MARKETS-Brazilian stocks fall as fiscal woes cloud earnings

Credit: REUTERS/PAULO WHITAKER

Brazil's Bovespa pulled Latin American shares lower on Thursday after data showed the region's largest economy posted its biggest fiscal shortfall since January, but robust earnings from beer-maker Ambev helped contain further losses.

By Agamoni Ghosh

July 25 (Reuters) - Brazil's Bovespa pulled Latin American shares lower on Thursday after data showed the region's largest economy posted its biggest fiscal shortfall since January, but robust earnings from beer-maker Ambev helped contain further losses.

MSCI's index of Latin American stocks .MILA00000PUS fell 1%, with heavyweight indexes in Brazil .BVSP and Mexico .MXX shedding about 0.7% each.

Latest data showed Brazil posted a current account deficit of $2.9 billion in June, the biggest shortfall since January and almost twice as wide as the $1.5 billion deficit median forecast in a Reuters poll.

Brazil's economy is struggling to emerge from a crippling recession, with the government focused on passing through Congress a pension overhaul that it hopes will prop up public finances and kick-start growth.

Shares of Brazilian brewer Ambev ABEV3.SA, rose 8% after the company posted better-than-expected quarterly results, while Bradesco BBDC4.SA sagged despite a 25% rise in recurring profit.

Adding to the dour mood, European Central Bank Chief Mario Draghi reiterated concerns about slowing global growth and all but pledged future interest rate cuts. The ECB held rates steady on Thursday.

Emerging market currencies, which typically gain on bets of interest rate cuts from developed world central banks, fell. MSCI's index for Latin American currencies .MILA00000CUS shed 0.5%.

The overall global data is just turning out to be quite negative and it seems the relief for EM currencies that came on the back of the Fed possibly lowering rates is starting to turn around, said Christian Lawrence, senior strategist, Latam FX, Rabobank.

The Mexican peso MXN= outperformed as oil prices moved higher, while stocks .MXX dropped, weighed down by Cemex CEMEXCPO.MX, which slid nearly 4% after it posted downbeat earnings that were hurt by lower volumes amid trade conflicts.

Chile's peso CLP= fell 0.4%, tracking a dip in the price of copper CMCU3, the country's top export. The peso has shed nearly 12% as the protracted trade war between the United States and China has taken its toll on copper prices.

"Chile is increasingly becoming a proxy for the trade war in this region because of that copper link," Lawrence said.

Key Latin American stock indexes and currencies at 1505 GMT

Stock indexes

Latest

daily % change

MSCI Emerging Markets .MSCIEF

1055.01

-0.03

MSCI LatAm .MILA00000PUS

2875.19

-0.88

Brazil Bovespa .BVSP

103430.80

-0.66

Mexico IPC .MXX

40948.98

-0.53

Chile IPSA .SPIPSA

4975.13

0.12

Argentina MerVal .MERV

39825.29

0.1

Colombia IGBC .IGBC

12925.29

0.08

Currencies

Latest

daily % change

Brazil real BRBY

3.7820

-0.35

Mexico peso MXN=D2

19.0277

0.12

Chile peso CLP=CL

694

-0.55

Colombia peso COP=

3207.35

-0.28

Peru sol PEN=PE

3.296

-0.06

Argentina peso (interbank) ARS=RASL

43.1300

-0.53

(Reporting by Agamoni Ghosh in Bengaluru Editing by Paul Simao)

((Agamoni.Ghosh@thomsonreuters.com; +918067491130; Reuters Messaging: Agamoni.Ghosh.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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