May 15, 2019 / 9:40 PM / in 5 days

EMERGING MARKETS-Latam assets broadly fall as growth fears weigh

 (Updates prices, adds market strategist's quote on Mexican
peso)
    By Aaron Saldanha
    May 15 (Reuters) - A Latin American stocks benchmark fell on
Wednesday, while most Latin American currencies weakened against
the dollar as surprisingly weak data out of China dented risk
sentiment and overcame optimism arising out of news of the
United States planning to delay a decision on tariffs on auto
imports.
    Data showing China's industrial output growth in April
slowed more than expected set a negative tone overnight for
Latin American markets. The world's second-largest economy is a
key destination for exports of Latin American resources. 
    The pall cast by the Chinese data was partially brightened
by U.S. officials saying President Donald Trump is expected to
delay a decision on tariffs on imported cars and parts by up to
six months.  
    MSCI's Latin American stocks index fell 0.7%
on the back of losses among stocks in index heavyweight Brazil.
MSCI's index of Latin American currencies dipped
0.3%.
    Sao Paulo-traded stocks dropped 0.5%, with most
sectors declining.
    Kroton Educacional SA and planemaker Embraer
 dived 5.2% and 4.2%, respectively, after each firm's
first-quarter results left their investors with limited cause
for optimism.
    The two stocks were among the biggest losers on the Bovespa,
which fell under the 92,000-point mark to end at its lowest
closing level since early 2019.
    Brazil's real weakened 0.6%, while yields on local
10-year bonds rose 9 basis points to 8.90%.
    Goldman Sachs economists cut their economic growth forecasts
for Brazil, predicting Latin America's top economy shrank in the
first quarter this year and will struggle to grow much faster in
2019 than it did in each of the last two years.
    Alberto Ramos, Goldman Sachs's head of Latin American
economic research, wrote in a note that progress towards fiscal
consolidation remains "quintessential to anchor market
sentiment" and to leverage what has been "so far a very shallow
and disappointing recovery."
    Mexican stocks dipped 0.2%, although the peso
firmed 0.5%, a day before a Banco de Mexico (Banxico) review of
borrowing costs. Many investors expect it to leave the key rate
at 8.25%.
    "Banxico will cut rates in H2 (2019) but we continue to
expect that slightly later in the year than the summer move
implied by the curve," Christian Lawrence, senior market
strategist at Rabobank, wrote in a note.
    "We would also argue that the door is still open for a hike
should the peso slump dramatically ... we expect the USD/MXN
pair to continue trading an 18.90 to 19.50 range in the next 1-3
months."
    Chile's peso edged firmer, underpinned by stronger
prices of copper, the country's top export.    
    Argentina's stocks rose 2.2%, while the peso
marked time.
    Argentina consumer prices rose by 3.4% in April, data
showed, decelerating from a month earlier and providing some
welcome relief to President Mauricio Macri as he looks to rein
in stubbornly high inflation in an election year.

        
    Latin American stock indexes and currencies at 2108 GMT
   
 Stock indexes                                   daily %
                                        Latest    change
 MSCI Emerging Markets                 1,015.97      0.2
 MSCI LatAm                            2,587.50    -0.72
 Brazil Bovespa                        91436.98    -0.71
 Mexico IPC                            43338.82    -0.21
 Chile IPSA                             5005.24    -0.27
 Argentina MerVal                      33218.06     2.18
 Colombia IGBC                         12248.63    -0.35
                                                        
 Currencies                                      daily %
                                                  change
                                         Latest  
 Brazil real                             4.0009    -0.13
 Mexico peso                            19.0544    -0.04
 Chile peso                               690.8     0.01
 Colombia peso                          3282.75     0.00
 Peru sol                                 3.317     0.15
 Argentina peso (interbank)             44.9600     0.02
                                                 
 

 (Reporting by Aaron Saldanha in Bengaluru
Editing by Chris Reese)
  
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