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Post : Most Latam markets rebound on China relief, Argentine peso extends falls
URL : http://business.financialpost.com/pmn/pmn-business/most-latam-markets-rebound-on-china-relief-argentine-peso-extends-falls
Posted : August 13, 2019 at 12:29 pm
Author : Reuters
Tags : REU
Categories : PMN Business

Most Latin American markets rebounded on

Tuesday as fears of further escalation in U.S.-China trade

tensions eased slightly after the United States delayed tariffs

on certain Chinese goods, while Argentina's peso continued its

slide on rising fears of a return to populist policies.

Equities and other risk assets across the globe took relief

from news that the U.S. administration will delay 10% tariffs on

certain Chinese products, including laptops and cell phones,

that had been scheduled to start next month.

The Brazilian real reversed early losses to trade up

0.4%, while Mexico's peso jumped 1% ahead of a central

bank rate decision this week.

The bank is expected to hold its benchmark interest rate

steady on Thursday, according to a Reuters poll, even as

analysts increasingly brace for a possible rate cut to lift the

country's misfiring economy.

Investors globally have been edge as a recent escalation in

the U.S.-China trade dispute, including the weakening of the

yuan past the 7-per-dollar mark, raised fears of recession.

Shares in Mexico lost 1% in what could be their third

straight session of losses. Most other Latam stock markets

besides Argentina rose, between 0.4% and 2%.

ARGENTINE UNCERTAINTY

Argentina's main stock index joined the rally,

jumping 10% after having lost nearly 38% the day before when

opposition candidate Alberto Fernandez and running mate Cristina

Fernandez de Kirchner won a stunning edge over incumbent

President Mauricio Macri in presidential primaries.

The showing pointed to significantly reduced chances of

Macri being re-elected, and investors brace for a possible

return to interventionist policies if the opposition were to win

elections in October.

The peso fell over 4% to 55.9 to the dollar after

a near 16% plunge on Monday. The currency had fallen

to record low of 65 per dollar in the previous session, sending

shockwaves across global financial markets.

"Key to watch will be how Fernandez tries to reduce market

uncertainty and to quell investor fears with his next

statements," wrote the EM team at TS Lombard led by Larry

Brainard.

The central bank intervened on Monday to curb the peso's

free-fall, but the more the central bank spends to stabilize the

currency over the next two and a half months, the less it will

have to pay off major debt maturities in 2020, TS Lombard

analysts say.

"This could feed a vicious cycle that could end up punishing

both the country and investors during the next government," they

said, in a glum outlook for the beleaguered currency.

Key Latin American stock indexes and currencies at 2012 GMT:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 971.51 -0.3

MSCI LatAm 2695.00 1.56

Brazil Bovespa 103299.47 1.36

Mexico IPC 39448.17 -1.01

Chile IPSA 4845.64 0.38

Argentina MerVal 30308.93 10.091

Colombia IGBC 12709.72 2.08

Currencies Latest Daily %

change

Brazil real 3.9668 0.42

Mexico peso 19.4117 1.00

Chile peso 705 1.28

Colombia peso 3409.8 0.43

Peru sol 3.384 -0.09

Argentina peso 55.3000 -3.25

(interbank)

(Reporting by Susan Mathew in Bengaluru;

Editing by Marguerita Choy)

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