EMERGING MARKETS-Latam stocks track Wall St higher, FX mixed in volatile trade
By Susan Mathew
April 2 (Reuters) - Most Latin American stocks rose on Thursday after Wall Street regained footing post a brief drop into the red after yet another record rise in U.S. weekly jobless claims to $6.65 million.
After dismal manufacturing data from around the globe had dented sentiment on Wednesday, Latam stocks .MILA00000CUS bounced 1.5%.
But the surge in U.S. job numbers along with a credit rating downgrade for Colombia, and Mexico flagging a GDP contraction, kept risk appetite subdued.
The U.S. claims number topped last week's 3.3 million as more stay-at-home orders were enforced to contain the spread of the coronavirus pandemic.
The dollar retreated slightly before making up those losses, while Wall Street stock indexes dropped but soon made up losses. FRX/.N
Even though the number topped estimates by a wide margin, some analysts say the market may have priced it in, while others say its beyond comprehension.
"We believe that companies will take a considerable amount of time to re-hire workers. The longer it takes for the economy to restart, the longer companies will take to get back into gear," said Andrew Smith, chief investment officer at Delos Capital Advisors, signaling a prolonged trickle-down effect one developing economies dependant of the U.S. such as Mexico.
A surge in oil price helped the currencies of Mexican MXN= and Colombian COP= weather the strong dollar, while Brazil's real BRL= gave up 0.4% for its fifth straight session of declines. Higher copper prices helped producer Chile's peso CLP= stay afloat. MET/LO/R
Among regional stocks, Chile's IPSA .SPIPSA jumped 4.2% to lead gains, while Brazil's Bovespa BVSP rose 1.6%. Colombian shares .COLCAP rose 0.9% after four session of losses.
Fitch on Wednesday downgraded Colombia's credit rating, leaving it just a notch above junk, citing the likely economic weakening spurred by the pandemic.
"Colombia still has one of the best outlooks for LATAM, but the risk at getting downgraded to junk is growing and that could scare away a lot of foreign investors," said Edward Moya, senior market analyst at OANDA, New York.
In Mexico, while the finance ministry predicted a 3.9% contraction for the economy this year, Bank of America forecast a 8% shrinkage due to fallout from the virus outbreak.
Brazil continued attempts to shield its economy from impacts of the crisis with the Monetary Council authorizing the central bank to lend directly to banks using credit portfolios as collateral, while the government unveiled a $10 billion scheme to protect jobs.
Key Latin American stock indexes and currencies at 1430 GMT:
Daily % change
MSCI Emerging Markets .MSCIEF
MSCI LatAm .MILA00000PUS
Brazil Bovespa .BVSP
Mexico IPC .MXX
Chile IPSA .SPIPSA
Argentina MerVal .MERV
Colombia COLCAP .COLCAP
Daily % change
Brazil real BRBY
Mexico peso MXN=D2
Chile peso CLP=CL
Colombia peso COP=
Peru sol PEN=PE
Argentina peso (interbank) ARS=RASL
(Reporting by Susan Mathew in Bengaluru; Editing by Alistair Bell)