May 24, 2019 / 7:43 PM / a month ago

EMERGING MARKETS-Latam FX firm, Mexican assets hit by poor GDP data

 (Updates prices)
    By Susan Mathew
    May 24 (Reuters) - Most Latin American currencies climbed on
Friday as the dollar weakened, but Mexico's peso and stocks
underperformed after data showed that its economy shrank in the
first quarter.
    Regional currencies, except for Mexico's, rose between 0.2%
and 0.6% as the greenback slipped after orders for U.S.-made
capital goods fell - further evidence that the broader economy
is slowing, due in part to the U.S.-China trade dispute.
    Brazil's real rose 0.6% on the day and was on track
to break a six week losing streak and post gains of about 2.1%
this  week.  
    The Mexican peso was trading flat 1930 GMT.
    Mexico's economy shrank in the first quarter from the
October-December period, data showed, as services and industrial
activity dipped - the first contraction since the second quarter
of 2018.
    This deals a blow to President Andres Manuel Lopez Obrador's
government that took office in December pledging to ramp up
lackluster growth and job creation in Latam's No. 2 economy.
    "The weak Q1 GDP figure means the economy won't, barring a
major surprise, grow by the 2.5% that we had projected ... The
next few years will be underwhelming for Mexico's economy," said
William Jackson, chief emerging markets economist at Capital
Economics.
    Mexican shares touched a two-month low and were on
track to end lower for a fourth straight day. 
    Other stocks in the region were mixed with optimism around
the U.S.-China trade war being muted.
    President Donald Trump said U.S. complaints against Huawei
Technologies might be resolved within the framework of a
U.S.-China trade deal and predicted a swift end to the trade
war, although no high-level talks have been scheduled between
the two countries. 
    Brazil shares slipped 0.26%, down for a third
session as losses in financials and consumer discretionary
stocks weighed. On the week, the Bovespa index was set to gain
around 4%, its biggest since early January.
    Uncertainty around the pension reforms also lingered.
Brazil's President Jair Bolsonaro urged Congress not to water
down the pension reform bill amid threats by the economy
minister that he would quit if it was reduced to a "little
reform." 
    Stocks in Colombia and Argentina climbed
more than a percent each. On a weekly basis, those in Colombia
fell, while Argentina shares rose.  
    Colombia received mixed messages from ratings agencies on
Thursday, with Moody's revising the country's sovereign outlook
to stable from negative, while Fitch went the other way and
adjusted the outlook to negative from stable.
  
 Key Latin American stock indexes and currencies at 1930 GMT:
 
    Stock indexes             Latest    Daily %
                                         change
 MSCI Emerging Markets          988.09      0.33
                                        
 MSCI LatAm                    2596.05     -0.01
                                        
 Brazil Bovespa               93669.29     -0.26
                                        
 Mexico IPC                   42581.03     -0.54
                                        
 Chile IPSA                    4893.69         0
                                        
 Argentina MerVal             34991.63      1.78
                                        
 Colombia IGBC                12146.46      1.32
                                        
                                                
       Currencies             Latest    Daily %
                                         change
 Brazil real                    4.0130      0.84
                                        
 Mexico peso                   19.0420     -0.03
                                        
 Chile peso                      694.5      0.33
                                        
 Colombia peso                 3357.43      0.54
 Peru sol                        3.344      0.15
                                        
 Argentina peso                44.8000      0.65
 (interbank)                            
                                        
 
 (Reporting by Susan Mathew in Bengaluru;
Editing by Alistair Bell)
  
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