(Updates prices)
By Susan Mathew
April 29 (Reuters) - Joining a global rally, Latin American
stocks surged on Wednesday, with Brazil and Mexican shares at
near seven-week highs, as hopes of a treatment for the COVID-19
pandemic boosted risk sentiment.
U.S. drugmaker Gilead Sciences said its
experimental antiviral drug remdesivir helped improve symptoms
for COVID-19 patients who were given the drug early.
The development comes as many countries plan to gradually
reopen economies that were shut down to curb the spread of the
viral disease.
MSCI's index of Latam stocks jumped 6.5%,
while its currency counterpart rose 3.5%, on
track for its biggest percentage gain in four years.
The dollar took a hit from the rising risk appetite, while
the U.S. Federal Reserve on Wednesday left interest rates near
zero and repeated a vow to do what it takes to shore up the U.S.
economy amid the pandemic, impacts of which the bank sees as
extending to the medium term.
"The Fed's downbeat tone offers a sobering assessment on
economic prospects," said James Knightley, chief international
economist at ING.
"Nonetheless, there is a promise that it is prepared to
expand its toolkit to safeguard the flow of credit. Given this
backdrop, a move from the emergency zero percent level looks set
to be many quarters maybe even years away."
Aided also by a surge in oil prices, crude exporter Mexico's
peso firmed 2.2%, on course for its best day in a month,
while Colombia's currency surged almost 2.8% for its
biggest daily gain in almost 3-1/2 years.
In Brazil, the real rose nearly 3%, while Sao
Paulo-listed stocks extended gains into a third straight
session.
Economy Minister Paulo Guedes flagged more aid for
virus-stricken states, while also suggesting that interest rates
in the country could fall further into record-low territory.
As U.S. stock index rallied, other Latam bourses followed,
with those of Mexico and Chile climbing about 2.7%
each.
In the emerging market space, Latin American assets have
been some of the worst casualties of the pandemic-driven rout in
markets, more so because of their dependency on commodity
prices.
But "given our more bullish commodities forecasts in the
second half of the year and low valuations, we expect Latin
American assets to outperform over a six-month basis," write
Goldman Sachs emerging market strategists Ron Gray and Caeser
Maasry in a note.
Key Latin American stock indexes and currencies at 1932 GMT:
Stock indexes Latest Daily %
change
MSCI Emerging Markets 921.87 2.12
MSCI LatAm 1727.19 6.45
Brazil Bovespa 83513.03 2.71
Mexico IPC 36814.53 2.75
Chile IPSA 4012.17 2.85
Argentina MerVal 32880.09 -0.559
Colombia COLCAP 1151.23 0.51
Currencies Latest Daily %
change
Brazil real 5.3595 2.91
Mexico peso 23.7880 2.03
Chile peso 834.8 1.25
Colombia peso 3919.2 2.79
Peru sol 3.3657 0.63
Argentina peso 66.7400 -0.15
(interbank)
(Reporting by Susan Mathew in Bengaluru;
Editing by Alistair Bell)
Our Standards: The Thomson Reuters Trust Principles.