January 8, 2020 / 3:04 PM / 6 months ago

EMERGING MARKETS-Latam assets rebound in absence of further U.S.-Iran military escalation

    * Mexican peso at strongest level since May 2019
    * Latam FX index set to snap 5-day losing streak 
    * Investors await statement from Trump 

    By Shreyashi Sanyal
    Jan 8 (Reuters) - Latin American stocks and currencies
rebounded on Wednesday as investors warmed to riskier assets in
the absence of a fresh escalation in tensions between the United
States and Iran, while the Mexican peso touched an eight-month
high. 
    Markets around the globe were jolted by Iran's missile
attack on U.S.-led forces in Iraq, in retaliation against the
killing of an Iranian commander in a U.S. air strike late last
week. 
    Tensions in the Middle East pushed investors away from
riskier assets in Latin America and boosted demand for perceived
safe-haven assets such as gold and the Japanese yen. 
    Trump said casualties and damage from the missile attacks
were being assessed. The White House said the president would
make a statement at 11 a.m. (1600 GMT).
    "As long as the U.S. does not respond to Iran's most direct
attack.... tensions should gradually ease and appetite for risk
should improve," said Piotr Matys, senior emerging markets
FX strategist at Rabobank.
    "However, it is still too early to declare with a high
degree of confidence that the conflict is over. Investors will
be hoping that President Trump refrains from making inflammatory
comments when he speaks later today." 
    MSCI's index for Latin American currencies
rose 0.4%, on track to log its first rise in six sessions. 
    The Mexican peso rose 0.5% to 18.7860 against the
dollar, strengthening to its highest level since early May 2019.
    Market participants seemingly shrugged off data which showed
Mexican auto exports posted their first decline in a decade last
year. 
    Mexican President Andres Manuel Lopez Obrador said that he
expects foreign investment to increase as the U.S. Senate is set
to approve the U.S.-Mexico-Canada Agreement (USMCA) trade deal.

    
    Key Latin American stock indexes and currencies at 1428 GMT:
        
 Stock                             Latest     Daily %
   indexes                                    change
 MSCI Emerging Markets             1111.02    -0.43
                                              
 MSCI LatAm                        2919.89    0.08
                                              
 Brazil Bovespa                    116143.63  -0.44
 Mexico IPC                                -              -
 Chile IPSA                        4913.71    0.01
 Argentina MerVal                  41057.82   -0.141
 Colombia COLCAP                   1663.83    0
                                              
 Currencies                        Latest     Daily %
                                              change
 Brazil real                       4.0689     -0.12
 Mexico peso                       18.8120    0.46
 Chile peso                        768.66     0.02
 Colombia peso                     3259.36    0.05
                                              
 Peru sol                          3.3168     0.13
 Argentina peso (interbank)        59.8150    0.00
                                              
 

 (Reporting by Shreyashi Sanyal in Bengaluru; editing by Nick
Macfie)
  
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