Latam stocks and currencies slide on Trump jitters, China woes
Brazil's inflation up more than expected in October
Petrobras up after higher earnings, dividend
Colombian government eyes further 2024 budget cuts
MSCI Latin American stocks index down 2%, FX down 1.1%
Updated at 3:30 p.m. ET
By Johann M Cherian and Ankika Biswas
Nov 8 (Reuters) -Latin American currencies and stocks dropped on Friday, as uncertainty around a second Trump administration in the U.S., disappointment over a China stimulus package and domestic economic woes hurt risk-taking.
MSCI's index tracking Latam stocks .MILA00000PUS slid 2%, while a currencies index .MILA00000CUS lost 1.1% as the dollar rebounded from a brief pause spurred by the Federal Reserve's 25-basis-point interest-rate cut in the previous session.
Despite severe market volatility on Wednesday following Donald Trump's presidential victory, the indexes were set for weekly gains, with analysts saying that much of the risk was priced in ahead of the U.S. election.
The MSCI stocks index has lost more than 20% so far this year, while the currencies index is down more than 7% during the same period.
Mexico's peso MXN= depreciated nearly 2% on Friday, hovering over 20-against-the-greenback, while equities .MXX fell 0.7% as investors were on edge for further clues on Trump's policies, much of which could be detrimental to Latin America'ssecond-largest economy.
However, the currency had fared better than feared, even shrugging off the steep losses on the U.S. election outcome day and gaining over 1% on Thursday.
"One explanation being put forward to explain the relatively modest moves in the Mexican peso since Trump's election victory is that the country may be spared many of Trump's tariffs threats (as happened during his first term)," said Kimberley Sperrfechter, EM economist at Capital Economics.
"But there are big uncertainties around the extent to which Trump may now be more wedded to imposing tariffs and the Sheinbaum administration's ability to build good working relations with the U.S. and its willingness to offer concessions."
A top Mexican diplomat said the country will continue pursuing measures to stop migrants from reaching its northern border with the US, as Trump has vowed a new crackdown on illegal immigration.
Brazil's real BRL= weakened 1.4% as investors assessed data that showed consumer prices rose more than expected in October, days after the central bank raised interest rates.
The real has lost nearly 16% so far this year despite recent rate hikes on worries of fiscal instability. Markets are now pricing in a 75-basis-point rate hike at the policy meeting next month.
Brazilian state-run oil firm Petrobras PETR4.SA climbed 2% following strong third-quarter net profit and an announcement of $3 billion in dividends.
Colombia's peso COP= slipped fell 1.3%, tracking a 2% drop in crude prices. The Colombian government is looking at making additional cuts to its 2024 budget amid fiscal difficulties in the oil-producing nation, two government sources close said.
The currencies of copper producing nations Chile CLP= and Peru PEN= weakened 2.3% and 0.4%, respectively, as copper prices dropped on disappointment over the extent of top consumer China's fiscal stimulus measures.
Meanwhile, data showed Chile's consumer prices rose more than expected.
On the equities front, the Bovespa index .BVSP fell 1.4% to a three-month low, with mining giant Vale VALE3.SA slumping 5% on the back of lower copper and iron ore prices.
Argentina's MerVal index .MERV was the worst-hit regional bourse, down 2.5%, after hitting another record high during the day.
Key Latin American stock indexes and currencies:
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1134.17 | -0.56 |
MSCI LatAm .MILA00000PUS | 2128.45 | -1.98 |
Brazil Bovespa .BVSP | 127902.91 | -1.37 |
Mexico IPC .MXX | 51941.91 | -0.71 |
Chile IPSA .SPIPSA | 6519.72 | -0.64 |
Argentina Merval .MERV | 1964487.25 | -2.534 |
Colombia COLCAP .COLCAP | 1340.32 | -1.38 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.7236 | -0.55 |
Mexico peso MXN= | 20.162 | -1.85 |
Chile peso CLP= | 970.17 | -2.25 |
Colombia peso COP= | 4354.61 | -1.25 |
Peru sol PEN= | 3.764 | -0.37 |
Argentina peso (interbank) ARS=RASL | 993.5 | 0.05 |
Argentina peso (parallel) ARSB= | 1115 | 0.45 |
Reporting by Johann M Cherian and Ankika Biswas in Bengaluru; Editing by Paul Simao and Alistair Bell
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