June 12, 2020 / 7:14 PM / 23 days ago

EMERGING MARKETS-Latam assets eye weekly losses; Brazil's real, stocks fall

    * MSCI Latam equity index to fall 6% for the week
    * Most regional stocks gain for the day
    * Regional currencies set for worst week in more than a
month

 (Updates prices)
    By Susan Mathew and Ambar Warrick
    June 12 (Reuters) - Brazilian stocks and the real slid in
catch-up trade on Friday, while most other Latin American
currencies trended lower and were set for steep weekly losses as
markets reassessed the prospect of a swift post-COVID 19
recovery. 
    The MSCI's index of regional currencies fell 1.4% and was
set for its worst week since late-April. The index of regional
equities was on track for a 6% weekly loss.
    Latin American risk assets had come off three-month highs
this week as a rally ran out of steam, with dour comments from
the U.S. Federal Reserve exacerbating the sell-off on Thursday.
    "The impressive rally seen in recent weeks showed signs of
strain after the widespread profit-taking seen this week," wrote
Gustavo Rangel, Chief Economist, LATAM, at ING.
    "The correction may prove to be temporary, however, if signs
of a recovery in economic activity consolidate and Covid-19
health indicators remain under control, as the reopening in
business activities gains momentum." 
    Returning from a day's holiday, the real slipped
around 2.6%, while Sao Paulo-listed stocks were set for
their worst day in six weeks.
    Most other regional bourses recovered as they tracked Wall
Street higher, but concerns remained as Latam becomes the latest
epicenter of the novel coronavirus outbreak. Brazil is the
second worst hit worldwide in terms of number of cases while
deaths in Mexico approached 16,000.
    Next week investors will be looking forward to a meeting of
the Brazilian central bank, which is expected to cut rates
further into record-low territory to support Latin America's
largest economy.
     "In Brazil, the Monetary Policy Committee is facing a
backdrop characterized by a sharp contraction of real activity
and significant labor market deterioration, visibly below target
inflation, and highly accommodative global monetary conditions.
This backdrop supports additional rate easing," Goldman Sachs
analysts wrote in a note.
    The Mexican peso rose more than 1.5% after the
currency plummeted on Thursday as worries over a prolonged
economic recovery were exacerbated by fears of a second wave of
COVID-19 infections in the United States, hitting oil prices.
    Lockdowns to curb the virus have already hammered markets,
with Mexico facing its steepest recession in decades while
economic indicators in Brazil paint a dour picture. 
    
    Latin American stock indexes and currencies:
    
    Stock indexes             Latest     Daily % change
 MSCI Emerging Markets          984.90             -0.87
                                        
 MSCI LatAm                    1941.30             -2.68
                                        
 Brazil Bovespa               91604.92             -3.25
                                        
 Mexico IPC                   37370.19              1.47
                                        
 Chile IPSA                    3976.31              0.81
                                        
 Argentina MerVal             42831.46            -0.526
                                        
 Colombia COLCAP               1150.19              2.55
                                        
                                                        
       Currencies             Latest     Daily % change
 Brazil real                    5.0714             -2.63
                                        
 Mexico peso                   22.3780              1.60
                                        
 Chile peso                      793.5             -0.78
                                        
 Colombia peso                 3777.55             -0.38
 Peru sol                       3.4647             -0.17
                                        
 Argentina peso                69.3700             -0.07
 (interbank)                            
                                        
 
    

 (Reporting by Susan Mathew in Bengaluru;
Editing by Alistair Bell and Grant McCool)
  
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