August 19, 2019 / 3:26 PM / a month ago

EMERGING MARKETS-Latam stocks lifted by stimulus hope, currencies weaken

    By Sruthi Shankar
    Aug 19 (Reuters) - Brazil stocks rose for a second straight
session on Monday, as signs of stimulus for China's slowing
economy eased growth worries, although currencies in the region
weakened in line with their emerging market peers.
    Sao Paulo-listed stocks rose about 0.5%, tracking
gains for global stock markets after China's central bank
announced key interest rate reforms over the weekend, fueling
expectations of an imminent reduction in corporate borrowing
costs.
    State-run oil firm Petrobras rose nearly 2% as
oil prices gained following a weekend attack on a Saudi oil
facility by Yemen's Houthi forces.
    The prospect for fiscal stimulus for Germany also helped the
mood, with Mexican stocks jumping more than 1%, while the
MSCI's index of emerging market stocks rose 0.8%.

    "Equity markets and government bonds are up with the USD
losing ground on the back of the expectation that fiscal
measures in Germany and changes in PBoC's monetary policy may
avoid or at least delay the widely anticipated economic global
recession," Banorte Research analysts wrote in a note.
    Financial markets are coming off a rough week, marked by
worries about an escalation in the U.S.-China trade war, moves
in the U.S. bond market pointing to recession on the horizon and
turmoil in Argentine markets. 
    Currencies, meanwhile, were on the back foot as investors
speculated about the path of U.S. interest rates ahead of U.S.
Federal Reserve Chairman Jerome Powell's speech at an annual
meeting of central bankers in Jackson Hole later this week.
    The Brazilian real and the Mexican peso
dropped about 0.7%, while the Chilean peso fell 0.4%
after central bank data showed the country's gross domestic
product grew 1.9% in the second-quarter of 2019 as slumping
global trade and falling copper prices continue to take their
toll.
    Markets in Argentina were closed for a local holiday, and
investors will watch for signs of further weakness when markets
open for trading after ratings agencies Fitch and Standard &
Poor's downgraded Argentina's sovereign debt rating and Treasury
Minister Nicolas Dujovne resigned amid economic crisis.

    Argentine markets have collapsed since last week's primary
vote saw opposition candidate Alberto Fernandez trouncing
business friendly President Mauricio Macri. 
    The cost of insuring against an Argentine sovereign default
rose after Fernandez said the country would struggle under
present conditions to repay a loan to the International Monetary
Fund.  

    Latin American stock indexes and currencies at 1455 GMT: 
    
 MSCI Emerging Markets       978.35     0.83
                                     
 MSCI LatAm                 2599.97    -0.38
                                     
 Brazil Bovespa           100313.38     0.51
                                     
 Mexico IPC                39623.24     0.72
                                     
 Chile IPSA                 4823.77     0.53
                                     
 Argentina MerVal          30406.65   -2.038
                                     
 Colombia IGBC             12527.47      1.1
                                     
                                            
      Currencies           Latest    Daily %
                                     change
 Brazil real                 4.0311    -0.70
                                     
 Mexico peso                19.8020    -0.77
                                     
 Chile peso                   711.7    -0.41
                                     
 Colombia peso              3438.72    -0.16
                                     
 Peru sol                     3.384    -0.18
                                     
 Argentina peso                   -        -
 (interbank)                         
                                     
 

 (Reporting by Sruthi Shankar in Bengaluru
Editing by Chris Reese)
  
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