September 9, 2016 / 3:15 PM / 2 years ago

EMERGING MARKETS-Latam markets slump on N. Korea nuclear test, Fed jitters

By Bruno Federowski
    SAO PAULO, Sept 9 (Reuters) - Latin American currencies and
stocks slumped on Thursday, weighed down by concerns over North
Korea's latest nuclear test and hawkish comments by a U.S.
Federal Reserve policymaker.
    Traders scurried for the safety of the U.S. dollar at market
open after North Korea announced it had conducted its fifth
nuclear test. 
    The search for safe havens accelerated following a speech by
Boston Fed President Eric Rosengren, who said the U.S. central
bank increasingly faces risks if it waits too much longer to
raise rates. 
    His remarks rekindled expectations that the Fed could
tighten policy soon after a batch of surprisingly weak economic
figures triggered a collapse of bets on a September rate hike.
    Most Latin American currencies dropped more than 1 percent,
with the Colombian peso weakening more than its peers as
prices of crude oil, a key export and source of tax revenue,
fell below $49 per barrel.  
    The Brazilian real retreated about 2 percent to the
greenback as traders worried that newly inducted President
Michel Temer could struggle to find support for painful
austerity measures among both voters and lawmakers.
    Central bank figures showing strong outflows last week also
fostered concerns that expectations of a flurry of foreign
capital following the impeachment of Temer's predecessor, Dilma
Rousseff, could have been overly optimistic.
    Nearly all shares in Brazil's benchmark Bovespa stock index
 fell. Pulpmakers Suzano Papel e Celulose SA 
and Fibria Celulose SA were the only gainers, with
the weaker real boosting the export-heavy sector.
    Shares in Usinas Siderúrgicas de Minas Gerais 
fell about 1 percent after its board approved the terms of a
debt renegotiation deal with banks and bondholders involving 92
percent of the steelmaker's total debt. 
    Key Latin American stock indexes and currencies at 1500 GMT:
 Stock indexes                                daily %   YTD %
                                               change  change
 MSCI Emerging Markets                909.56    -1.91   16.77
 MSCI LatAm                          2407.30    -3.88   36.88
 Brazil Bovespa                     58911.16    -2.19   35.90
 Mexico IPC                         46769.51    -1.37    8.82
 Chile IPSA                          4088.64    -0.43   11.10
 Chile IGPA                         20334.58    -0.35   12.03
 Argentina MerVal                   16135.65    -1.95   38.20
 Colombia IGBC                      10364.75     -0.9   21.26
 Venezuela IBC                      11993.15     0.06  -17.79
 Currencies                                   daily %   YTD %
                                               change  change
 Brazil real                          3.2642    -1.69   20.92
 Mexico peso                         18.8600    -0.95   -8.64
 Chile peso                            670.5    -0.97    5.85
 Colombia peso                       2903.09    -2.04    9.17
 Peru sol                              3.385    -0.59    0.86
 Argentina peso (interbank)          15.0700     0.00  -13.85
 Argentina peso (parallel)             15.24     0.26   -6.36

 (Reporting by Bruno Federowski; Editing by Lisa Von Ahn)
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