January 4, 2019 / 9:44 PM / 7 months ago

EMERGING MARKETS-Latam stocks rally; Brazil's Bovespa at all-time high

 (Recasts throughout)
    By Agamoni Ghosh
    Jan 4 (Reuters) - Latin American stock markets rallied on
Friday with Brazil's benchmark index notching a record-high
close for the third straight day as investors cheered fresh
U.S.-China trade talks, a strong U.S. payrolls report and a
perceived dovish stance from the U.S. Federal Reserve. 
    Equities around the globe rallied as U.S. employment data
pointed to economic strength and on news that China and the
United States will hold trade talks in Beijing next week. 
    Stocks surged further after U.S. Federal Reserve Chairman
Jerome Powell said the central bank will be sensitive to the
downside risks the market is pricing in.
    MSCI's index for Latin American stocks
posted its best week since July 2017, pulled higher by robust
gains on Brazil's Bovespa index which logged a new
all-time high for the third consecutive day. 
    "The biggest driver was global factors today, mostly on the
news coming from abroad," said Mauricio Oreng, senior Brazil
strategist at Rabobank. 
    Bovespa began the day with pressure on profits, following
statements by President Jair Bolsonaro about a pension reform
for minimum retirement ages significantly lower than those
proposed by his predecessor, but later turned positive after the
opening of U.S. stock markets.
    "For the time being we don't have solid information on the
actual plans of Bolsonaro, so markets are on a wait-and-see
mood," added Oreng.
    Buenos Aires' Merval index outperformed all regional
stock markets by jumping 4 percent on the day, also posting its
biggest weekly gain since the first week of November 2018. 
    Indexes in Mexico, Chile and Colombia
 also rose between 0.3 percent and 1.1 percent on the
overall upbeat sentiment from abroad.
    A soft dollar, meanwhile, helped prop up currencies in the
region, after Powell said the central bank would be patient with
its monetary policy which investors largely read as dovish.
    "It's sort of tentative. We may see a lot more choppiness
until the Fed clearly says it will no longer hike rates," said
Gustavo Rangel, chief economist, LATAM, at ING Markets. 
     Most Latin American currencies were set to end the week
higher with Brazil's real set to post its best week since
October 2018. 
    Mexico's peso also edged higher for the week, but
remained under pressure with the central bank signaling the need
for monetary policy adjustment in wake of high inflation. 
    "Although Banxico remains solid as a rock, most members of
the board see upward risks to inflation and continue to support
a restrictive stance in the future," said Antje Praefcke, senior
FX analyst at Commerzbank in a note.
    The Chilean peso advanced to its highest level in
three weeks, driven by a strong rebound in the price of copper,
the country's main export, as U.S.-China trade optimism lifted
the industrial metal.
    Argentina's peso which halved in value in 2018
against the dollar as the country slipped into financial crisis,
started the year on a positive note, logging its best week in
over two months. 
    Although a loan from the International Monetary Fund to
shore up its finances and halt the currency's plunge has helped
the economy, President Mauricio Macri's austerity policies have
failed to bring his promise of "zero inflation."
    Former President Cristina Fernandez de Kirchner, remembered
for her social benefit programmes, is positioning herself to
challenge Macri in presidential elections later this year. 
    "It's temporary reprieve for the peso. When it gets to
mid-year we are likely to see markets choppy again due to the
presidential elections," said Rabobank's Oreng.  
    Key Latin American stock indexes and currencies at 2115

 Stock indexes                             daily % change
 MSCI Emerging Markets             966.59            1.79
 MSCI LatAm                       2741.48            1.76
 Brazil Bovespa                  91840.79            0.35
 Mexico IPC                      42470.04            1.01
 Chile IPSA                       5189.20            1.17
 Argentina MerVal                32303.05            3.98
 Colombia IGBC                   11420.55            0.68
 Currencies                                daily % change
 Brazil real                       3.7144            1.12
 Mexico peso                      19.4255            1.01
 Chile peso                         681.8            1.82
 Colombia peso                    3191.65            1.61
 Peru sol                           3.345            0.66
 Argentina peso (interbank)       37.3500            0.29
 (Reporting by Agamoni Ghosh in Bengaluru
Editing by Matthew Lewis)
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below