January 8, 2018 / 6:06 PM / 2 months ago

EMERGING MARKETS-Brazil stocks hold near all-time highs as optimism lingers

    By Bruno Federowski
    SAO PAULO, Jan 8 (Reuters) - Brazilian stocks held near
all-time highs on Monday, underpinned by optimism over the
nation's fiscal outlook.
    The benchmark Bovespa stock index was nearly flat
following a seven-day string of gains. Blue chips, such as miner
Vale SA and state-controlled oil company Petróleo
Brasileiro SA, led the gains.
    The rally in Brazilian stocks has been supported by investor
bets on a market-friendly winner to this year's presidential
elections who would advance President Michel Temer's austerity
    Former President Luiz Inácio Lula da Silva, who has railed
against Temer's policies, is leading opinion polls, but he could
be barred from running if his conviction for corruption is
upheld by a higher court on Jan. 24.
    Signs that the economic recovery is picking up steam have
also supported demand for Brazilian stocks, which are bound to
see earnings growth as Latin America's largest economy regains
solid footing.
    "Inflows from foreign investors remain substantial and the
pipeline looks strong," analysts at the Magliano brokerage wrote
in a report.
    The Brazilian real was also flat, roughly in line
with major Latin American currencies, after strengthening 2.6
percent so far this year. The Mexican peso was down 0.2
percent, while the Chilean peso rose 0.1 percent.
    Traders in emerging markets have been closely following U.S.
economic indicators and remarks by U.S. policymakers for hints
over the pace of interest rate hikes there, particularly after a
mixed jobs report last week.
    San Francisco Fed President John Williams told Reuters that
the U.S. central bank should hike rates three times this year
given that the already strong economy will get a boost from tax
    Higher U.S. rates could dampen demand for emerging markets,
which offer higher yields.
    Key Latin American stock indexes and currencies at 1800 GMT:
 Stock indexes                               daily %    YTD %
                                              change   change
 MSCI Emerging Markets              1205.62     0.38     3.67
 MSCI LatAm                         2974.18     0.17     4.99
 Brazil Bovespa                    79043.88    -0.03     3.46
 Mexico IPC                        50128.71     0.48     1.57
 Chile IPSA                         5698.14     0.05     2.40
 Chile IGPA                        28661.21     0.09     2.43
 Argentina MerVal                  32137.89    -0.16     6.89
 Colombia IGBC                     11853.55      1.1     4.25
 Currencies                                  daily %    YTD %
                                              change   change
 Brazil real                         3.2310     0.04     2.55
 Mexico peso                        19.2090    -0.19     2.55
 Chile peso                          605.11     0.11     1.58
 Colombia peso                       2906.3    -0.03     2.60
 Peru sol                             3.215    -0.09     0.68
 Argentina peso (interbank)         18.9900    -0.47    -2.05
 Argentina peso (parallel)            19.51    -0.31    -1.44
 (Reporting by Bruno Federowski; Editing by Jonathan Oatis)
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