SQM

EMERGING MARKETS-Latam stocks fall on Brazil weakness, currencies mixed after US data

Credit: REUTERS/AMANDA PEROBELLI

By Shashwat Chauhan

Feb 29 (Reuters) - Latin American currencies were mixed on Thursday, as investors digested a widely anticipated U.S. inflation reading, while stocks in the region lost ground on weakness in Brazilian shares.

MSCI's basket of Latin American stocks .MILA00000PUS dropped 0.3% as Brazil's main stock index .BVSP fell 1%, weighed on by losses in financial and energy stocks.

Mexican shares .MXX advanced 0.4%, while Colombian stocks fell 0.7%.

MSCI's gauge for Latin American currencies .MILA00000CUS was flat. It was on track to rise 0.3% in February.

Brazil's real BRL= was flat at 4.9673 per dollar after data showed the country's unemployment ratefor the first quarter came in below market expectations, with the closely watched average wages metricup 3.8% year-on-year.

"The behavior of real wages reinforces our call that services disinflationary process will remain sticky, narrowing room for Selic rate cuts with a 10% terminal rate," Citi economists wrote in a note.

Brazil's central bank cut benchmark interest rates for the fifth consecutive time to 11.25% in January.

The dollar index =USD weakened after data showed U.S. pricepressures picked up in January about in line with expectations, keeping a June interest rate cut from the Federal Reserve in play.

"Inflation continues to moderate despite upgraded outlooks for the U.S. economy ... today's numbers show just enough softening to keep worries at bay," David Russell, global head of market strategy at TradeStation said.

The Latin American stocks index was on pace to lose 0.6% in February after volatile trading on regional bourses through the month as investors reassessed expectations for Fed rate cuts.

Latin American stocks in February lagged MSCI's broader emerging markets stock index .MSCIEF, which clocked monthly gains of 4.6% as gains in technology stocks and moves by Chinese policymakers to shore up the world's second largest economy lifted sentiment.

On the day, the Mexican peso MXN=rose 0.3% and was on track to be the best monthly performing currency amongst local peers.

Data showed Mexico's seasonally adjusted unemployment rate stood at 2.8% in January.

Higher copper prices helped top producer Chile's peso CLP= rise 1%, though it was on track to lose nearly 4% in Feb.

Chile's SQMSQM.SN rose nearly 3% after the world's second largest-lithium producer said it expects steady prices of the metal in the coming months.

Argentinian stocks gained 1.2% while the peso on informal parallel market ARSB= traded at 1010 to the dollar.

The country's economy minister denied reports that talks were underway on a new loan deal with the International Monetary Fund, Argentina's largest debtor.

HIGHLIGHTS

** India's economy grows at its fastest pace in six quarters in election boost for Modi

Key Latin American stock indexes and currencies at 2000 GMT:

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

1020.38

0.16

MSCI LatAm .MILA00000PUS

2519.69

-0.49

Brazil Bovespa .BVSP

128734.25

-1.09

Mexico IPC .MXX

55561.80

0.38

Chile IPSA .SPIPSA

6449.88

1.66

Argentina MerVal .MERV

1011202.41

1.238

Colombia COLCAP .COLCAP

1276.65

-0.69

Currencies

Latest

Daily % change

Brazil real BRBY

4.9711

0.00

Mexico peso MXN=D2

17.0482

0.24

Chile peso CLP=CL

965.5

1.06

Colombia peso COP=

3923.6

-0.02

Peru sol PEN=PE

3.7683

0.40

Argentina peso (interbank) ARS=RASL

842.3000

-0.06

Argentina peso (parallel) ARSB=

1010

3.47

(Reporting by Shashwat Chauhan and Lisa Mattackal in Bengaluru; Editing by Chizu Nomiyama and Marguerita Choy)

((Shashwat.Chauhan@thomsonreuters.com;))

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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