October 11, 2019 / 7:48 PM / 3 months ago

EMERGING MARKETS-U.S.-China trade deal hopes spark rally in Latam assets

 (Updates prices)
    By Susan Mathew
    Oct 11 (Reuters) - Mexico's peso hit a two-month high on
Friday and Latin American stocks jumped nearly 2% as investors
picked up risky assets after U.S.-China trade negotiators
signalled that Beijing was open to a "partial" deal.
    The Mexican peso, vulnerable to trade risks due to
its reliance on U.S. economy, jumped 0.8%, while the Chilean
 and the Colombian pesos rallied 1%, getting an
extra boost from a rally in metal and oil prices.
    MSCI's index of emerging market currencies
posted its biggest percentage gain in more than three months,
rising 0.7%. On the week, the index clocked its best performance
in a month. 
    U.S. Treasury Secretary Steven Mnuchin and Chinese Vice
Premier Liu He, ended a second day of talks in Washington on
Friday and Bloomberg News reported the two sides had reached a
partial agreement that would lay the groundwork for a broader
    The surge in risk appetite and a rally in the pound
on rising hopes of a Brexit deal pressured the dollar. 
    "Optimism is likely to remain in place and we could start to
see the outflows from safe havens help trigger a major emerging
market rally," wrote Edward Moya, senior market analyst at OANDA
New York in a note published after the trade talks concluded.
    "The bottom could be in place for the U.S. dollar, but
traders will still require more concrete progress in trade
    CNN reported that Beijing has invited U.S. trade negotiators
for further trade talks in China. Both sides have slapped duties
on hundreds of billions of dollars of goods during the 15-month
trade dispute, which has shaken financial markets and uprooted
global supply chains.
    An index of Latin American stocks rallied,
with Brazil's Bovepsa leading gains with a 2% rise. The
Latam Index posted its second straight week of gains. 
    The real, however, posted the least gains among its
peers as data showed services sector activity fell in August
more steeply than economists had expected, another indication
that an economic recovery remained sluggish.
    Mexico's IPC index rose 0.8% after upbeat industrial
output data. The finance ministry said that recent operations to
reduce the debt burden of state oil company Pemex have
refinanced liabilities worth $20.1 billion.
    Key Latin American stock indexes and currencies at 1923 GMT:
    Stock indexes             Latest    Daily %
 MSCI Emerging Markets         1014.54      1.81
 MSCI LatAm                    2709.20      1.99
 Brazil Bovespa              103711.58      1.89
 Mexico IPC                   43251.53      0.75
 Chile IPSA                    5135.60      1.57
 Argentina MerVal             32073.66     1.041
 Colombia IGBC                12927.18      0.41
       Currencies             Latest    Daily %
 Brazil real                    4.0907      0.79
 Mexico peso                   19.3085      0.68
 Chile peso                     710.45      1.05
 Colombia peso                  3425.7      0.93
 Peru sol                        3.355      0.30
 Argentina peso                58.0300     -0.09

 (Reporting by Susan Mathew in Bengaluru
Editing by Sonya Hepinstall)
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