April 6, 2018 / 3:49 PM / 4 months ago

EMERGING MARKETS-LatAm currencies down as global trade tensions escalate

    By Bruno Federowski
    BRASILIA, April 6 (Reuters) - Latin American currencies
weakened on Friday after China fought back against a new U.S.
threat to increase tariffs on Chinese goods.
    China warned it was fully prepared to respond with a "fierce
counter strike" of fresh trade measures if the United States
follows through on President Donald Trump's threat to slap
tariffs on an additional $100 billion in Chinese goods.

    The warning came after Trump upped the ante on Thursday by
ordering U.S. officials to identify extra tariffs, escalating a
high-stakes confrontation with potentially damaging consequences
for the world's two biggest economies.
    "It's still a battle of words at this time but that is
enough to pull down prices," Guide Investimentos analysts wrote
in a client note.
    The currencies of Brazil, Mexico, Chile
 and Colombia weakened between 0.1 and 0.9
percent in early trading, despite data showing the U.S. economy
in March created the fewest jobs in six months.
    A weak labor market could drive the Federal Reserve to hike
interest rates at a slower pace than expected in coming months,
potentially boosting the allure of emerging market assets.
    Stock markets were also down across the region due to global
risk aversion, with MSCI's Latin American index
down 1.75 percent, its biggest daily loss in two months.
    Brazil's benchmark stock index led the declines,
falling 1.1 percent. 
    Shares of drug retailer RD were among the biggest
decliners after Credit Suisse cut its recommendation for the
stock to "underperform" from "outperform" in the wake of hefty
losses.
    
    Key Latin American stock indexes and currencies at 1540 GMT:
 Stock indexes                               daily %    YTD %
                                              change   change
                                  Latest              
 MSCI Emerging Markets              1161.86     -0.4     0.69
 MSCI LatAm                         3020.46    -1.77     8.73
 Brazil Bovespa                    84311.36    -1.05    10.35
 Mexico IPC                        47769.92    -0.38    -3.21
 Chile IPSA                         5592.93    -0.25     0.51
 Chile IGPA                        28025.93    -0.12     0.16
 Argentina MerVal                  31640.38    -0.71     5.24
 Colombia IGBC                     11778.76    -0.55     3.59
                                                             
 Currencies                                  daily %    YTD %
                                              change   change
                                     Latest           
 Brazil real                         3.3703    -0.86    -1.69
 Mexico peso                        18.3010    -0.52     7.64
                                                      
 Chile peso                           605.1    -0.26     1.58
 Colombia peso                      2792.73    -0.10     6.78
 Peru sol                             3.234    -0.25     0.09
 Argentina peso (interbank)         20.2200    -0.11    -8.01
                                                      
 Argentina peso (parallel)            20.48    -0.49    -6.10
                                                      
 
 (Reporting by Bruno Federowski
Editing by James Dalgleish)
  
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