July 17, 2019 / 8:32 PM / 5 months ago

EMERGING MARKETS-Latam FX firms as dollar softens, stocks drop on trade jitters

 (Updates with closing prices)
    By Sruthi Shankar
    July 17 (Reuters) - A soft dollar aided gains in Latin
American currencies on Wednesday, although stock markets in the
region came under pressure from an escalation in trade tensions
between the United States and China.
    The Brazilian real edged higher, drawing optimism
from progress in the government's pension reform bill, which is
set to go through a second round of voting in Brazil's lower
house of Congress next week.
    Despite a delay in the process, investors are hopeful about
its approval in both houses of Congress and are looking for more
policy moves beyond the pension reforms.
    "The big question in Brasilia is how much further the
administration's ambitious reform agenda can advance with a
president lacking a working majority in Congress," Eurasia
Group's Christopher Garman wrote in a note.
    "We expect much of it will. But a lot may depend on whether
Brazil finds itself in a low-growth trap."
    Brazil's government is planning to unveil a fiscal stimulus
package worth 63 billion reais ($16.8 billion) in the coming
days to kick-start a flagging economic recovery, newspaper Valor
Economico reported.
    Brazil's Bovespa index rose 0.2%, with shares of
retailer Magazine Luiza jumping to the top of the
index with a 5% gain after analysts at Bradesco upgraded the
company's stock to "outperform."
    Shares in state-controlled power utility Centrais Eletricas
Brasileiras SA rose about 4% after a local newspaper
reported the government was preparing a new bill to transfer the
company's controlling stake to private investors.
    Stock markets elsewhere in the region were hit by trade
concerns after U.S. President Donald Trump renewed his threat to
impose tariffs on another $325 billion in Chinese goods on
    Mexican stocks were weighed down by shares in mining
and transport company Grupo Mexico, which dropped
for a seventh session in the wake of a sulfuric acid spill at a
site that belonged to the company.
    Telecom operator America Movil rose 3% after a
surge in its second-quarter net profit on the back of foreign
exchange gains.
    The Mexican peso which took a hit in the previous
session after the government's new Pemex plan failed to impress
investors, managed to partly recover, moving 0.2% higher.
    The Colombian and the Argentine pesos
outperformed their Latin American peers with a 0.5% gain as the
dollar edged lower. 
    Key Latin American stock indexes and currencies at 1959 GMT:
 Stock indexes                Latest      Daily %
 MSCI Emerging Markets          1,055.18    -0.49
 MSCI LatAm                     2,930.01    -0.11
 Brazil Bovespa               104,009.75     0.23
 Mexico IPC                    42,544.40    -1.02
 Chile IPSA                     50,45.39    -0.61
 Argentina MerVal              41,444.96    -0.82
 Colombia IGBC                 13,093.28     -0.3
 Currencies                       Latest  Daily %
 Brazil real                      3.7600     0.28
 Mexico peso                     19.0570     0.15
 Chile peso                          682    -0.22
 Colombia peso                     3,183     0.49
 Peru sol                          3.288    -0.03
 Argentina peso (interbank)      42.4900     0.52

 (Reporting by Sruthi Shankar in Bengaluru; editing by Jonathan
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