By Lisa Pauline Mattackal
(Reuters) – Stocks across Latin America rose on Wednesday, tracking global shares higher as markets clawed back losses from a brutal sell-off at the start of the week, while Mexico’s peso jumped ahead of key data and a monetary policy decision.
Stocks in Brazil, Mexico and Argentina rose between 0.4% and 0.7%, while MSCI’s index of regional stocks was up 1.5%.
Meanwhile, Mexico’s peso soared 2.1%, recovering from a near two-year low touched on Monday after comments from the Bank of Japan’s deputy governor induced a sharp fall in the yen.
As a key beneficiary of yen-funded carry trades, where investors borrowed cheaply in the Japanese currency to invest in higher-yielding ones, Mexico’s currency was one of the worst hit as yen gains saw many of those trades unwind. Despite the day’s gains, the peso remains around lows last seen in March 2023.
“The good news for Mexico is we expect the U.S. Federal Reserve to cut rates in September, easing pressure on the currency, but as a bellwether for emerging market currencies any bad news in terms of a risk-off environment will hurt it,” said Andres Abadia, chief Latin America economist at Pantheon Macroeconomics.
Brazil’s real also rebounded nearly 1% to a two-week high against the dollar. An index of Latin American currencies rose nearly 1%.
Interest rate decisions are due Thursday from both Mexico and Peru, with Mexican inflation data also due.
Central banks in both countries are seen holding rates, but it remains to be seen how policymakers will assess the path forward in light of the recent volatility sparked by worries about slowing growth in the U.S. and China.
“The market has stabilized a little, so that will probably allow some central banks to continue with the normalization process of monetary policy,” Abadia said.
Emerging market bourses gained broadly, with Hungary’s main stock index up 1.8% in its best day in over two months.
Romania’s leu remained little changed against the euro after the central bank cut benchmark interest rates by 25 basis points, as expected by analysts polled by Reuters.
rose for the first time in three sessions against the dollar, while Israel’s snapped a seven-day losing streak.
Meanwhile, prices of El Salvador’s sovereign bonds rose after the International Monetary Fund said talks on a fund-supported program had made progress. The 2034 maturity rose over 2 cents to 71.44 cents on the dollar, according to LSEG data.
Markets in Colombia were closed for a public holiday.
HIGHLIGHTS
** GRAPHIC-Colombia’s Petro struggles mid-term with slow economy and stalled reforms
** Johannesburg Stock Exchange’s half-year profit slips on lower equity trading
** Fund managers to lengthen FX hedges on elections, volatility concerns, survey says
Key Latin American stock indexes and currencies
1051.26 1.98
MSCI LatAm 2167.13 1.52
Brazil 126861.02 0.47
Mexico IPC 52632.15 0.44
Chile IPSA 6218.85 0.65
Argentina Merval 1467782.0 0.701
3
Colombia COLCAP 1296.79 0.17
Currencies Latest Daily %
change
Brazil real 5.607 0.98
Mexico peso 19.146 2.14
Chile peso 943.4 0.05
Colombia peso 4135.5 0.07
Peru sol 3.7359 -0.79
Argentina peso (interbank) 936 0
Argentina peso (parallel) 1355 1.4760147
6
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