May 5, 2020 / 2:20 PM / 25 days ago

EMERGING MARKETS-Oil rally on hopes of easing lockdowns lifts Latam stocks, FX

    By Susan Mathew
    May 5 (Reuters) - Most Latin American currencies rallied on
Tuesday, with those of oil producers Mexico and Colombia in the
lead as crude prices rose on hopes that the easing of
coronavirus-induced lockdowns across several nations would fuel
demand. 
    The Mexican peso climbed 1%, while Colombia's
currency jumped 1.6%, inching closer to three-week highs,
as U.S. states California and New York outlined plans for
reopening businesses, while Spain, Italy, Turkey, India, and
Malaysia, among others, tentatively eased lockdowns.
    Goldman Sachs analysts forecast a moderate pickup in Brent
crude prices from current levels in the second half of the year.
    "A potential bottom in oil prices should affect all
oil-sensitive assets, but the degree and duration of the impact
will likely vary substantially."
    Chile's peso touched over five-week highs as copper
prices rose. Copper is Chile main source of export revenue.

    The moves come a day after a raft of manufacturing data from
across the globe showed a drastic drop in April due to severely
reduced economic activity amid widespread lockdowns to contain
the spread of the novel coronavirus.
    While emerging markets assets as a whole have suffered this
year due to the pandemic driven flight from risk, Latin American
markets have underperformed as their dependence on commodity
prices adds pressure to already weak economies.   
    Credit rating agency Moody's Investors Services on Monday
cut its forecast for Mexico's economic performance in 2020 to a
contraction in gross domestic product of 7% from a contraction
of 3.7% previously.
    Brazil's real rose 0.2% after initially trading
slightly lower. Data showed industrial output in Latin America's
largest economy fell much more than expected to their lowest
level since 2003 in March.
    Brazil's lower house of congress is due for a second round
voting on a constitutional amendment for a "war budget" of extra
spending and emergency measures to cushion the economy from the
pandemic's impact.
    As key U.S. stock indexes resumed their rally, regional
bourses followed suit, with Brazil's benchmark
Bovespa index rising 2.7% after two days of losses.
    Shares of state oil firm Petroleo Brasiliero
 rose more than 5%, while B2W Cia Digital
topped the index after the e-commerce firm and Petrobras
Distribuidora SA, owner of the nation's largest gas
station chain, sealed a deal to integrate some operations on
Monday.
    In Argentina, economy minister Martin Guzman told Reuters
that even though efforts to convince bondholders to accept a $65
billion debt restructuring proposal were proving tough work, he
had no plans to extend a Friday deadline for a deal.

    Three major creditor groups reiterated their stance that
they would reject a tough offer. The negotiations, which have
hammered Argentine bonds, will determine whether the country is
able to avoid slipping into what would be its ninth default,
damaging access to global markets as it struggles to escape from
a painful recession.
    
    Key Latin American stock indexes and currencies at 1403 GMT:
  Stock indexes           Latest   Daily %
                                   change
 MSCI Emerging Markets     899.34     1.28
                                   
 MSCI LatAm               1662.35     3.86
                                   
 Brazil Bovespa          81010.47     2.71
                                   
 Mexico IPC              36705.39     0.92
                                   
 Chile IPSA               3935.97     2.15
                                   
 Argentina MerVal               -        -
                                   
 Colombia COLCAP          1112.89     0.67
                                   
                                          
      Currencies          Latest   Daily %
                                   change
 Brazil real               5.5077     0.24
                                   
 Mexico peso              23.8240     0.99
                                   
 Chile peso                 831.4     0.58
                                   
 Colombia peso            3925.84     1.30
                                   
 Peru sol                  3.3777     0.18
                                   
 Argentina peso           67.0000    -0.10
 (interbank)                       
                                   
 
 (Reporting by Susan Mathew in Bengaluru; Editing by Bernadette
Baum)
  
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