October 1, 2019 / 8:08 PM / 9 months ago

EMERGING MARKETS-Latam currencies weaken as recession clouds loom

 (New throughout, updates prices)
    By Susan Mathew
    Oct 1 (Reuters) - Latin American currencies started October
on a weak footing on Tuesday after a surprise downturn in U.S.
manufacturing, while uncertainty about the passage of Brazil's
pension reforms hurt the country's assets.
    Regional currencies lost between 0.06% and 0.6%, with the
Mexican peso slipping to its lowest in nearly one month,
while Colombia's peso touched an all-time low.  
    U.S. manufacturing activity tumbled to a more than 10-year
low in September as lingering trade tensions weighed on exports,
data showed, stoking fears of slowing growth in the world's
largest economy.
    "This week's U.S. data calendar will be notable in shaping
risk sentiment, particularly ahead of the U.S.-China trade
talks," wrote Mazen Issa, a senior FX strategist at TD
Securities, in a research note.
    Representatives from the United States and China are due to
resume high-level trade talks next week in Washington. 
    "Developments in U.S. high yield space also suggest some
caution," he said, adding that the dollar may weaken further if
U.S. service sector data from the Institute for Supply
Management also slip.
    A slowdown in U.S. economic growth at a time when a European
recession seems imminent would remove one of the few bright
spots among global markets. That pushed both U.S. stocks and the
dollar lower.
    Brazilian stocks also fell on uncertainty about the
passage of an overhaul to the country's bloated pension system,
a change seen as crucial in helping to revive the economy.
    The government's leader in the upper house on Tuesday said a
second-round vote on pension reform scheduled for next week in
Brazil's Senate may not take place if the government reneges on
promises made to lawmakers in return for their support.

    Government data showed Brazil's trade surplus in September
was the smallest in five years and missed market expectations.

    In Mexico, a central bank survey showed that analysts
lowered their expectations for inflation and growth this year.
Mexico's economy, which barely avoided a recession in the first
half of the year, saw manufacturing contract for the fourth
straight month in September.
    Mexico's finance minister said the country may eventually
require a revamped tax code after the first three years of
President Andres Manuel Lopez Obrador's administration for which
he has promised no new taxes.  
    Chile's peso weakened the least among regional
currencies after data showed growth in economic activity beat
expectations, boosted by a surge in mining following several
months of sluggish growth.  
    Key Latin American stock indexes and currencies at 1930 GMT:
    Stock indexes             Latest    Daily %
 MSCI Emerging Markets          998.17     -0.28
 MSCI LatAm                    2648.53     -0.69
 Brazil Bovespa              104004.67     -0.71
 Mexico IPC                   42920.28     -0.21
 Chile IPSA                    5043.14     -0.31
 Argentina MerVal             30016.35     3.266
 Colombia IGBC                12866.40      0.27
       Currencies             Latest    Daily %
 Brazil real                    4.1624     -0.18
 Mexico peso                   19.8184     -0.46
 Chile peso                     728.72     -0.06
 Colombia peso                  3493.5     -0.48
 Peru sol                        3.386     -0.50
 Argentina peso                57.6400     -0.08
 (Reporting by Susan Mathew in Bengaluru; Editing by Richard
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