May 18, 2020 / 3:02 PM / 17 days ago

EMERGING MARKETS-Latam stocks, FX surge as commodity prices rally

    By Susan Mathew
    May 18 (Reuters) - Latin American stocks and currencies
roared higher on Monday, with Brazil shares rising 3.5% as a
commodity prices surged on hopes of economic recovery as
countries eased pandemic-induced lockdowns.  
    Encouraging data from a COVID-19 vaccine trial by U.S.
drugmaker Moderna added to the optimism, bolstering
Wall Street's rally.
    Despite worrying rises in the number of new cases in
emerging markets, especially Brazil, and simmering U.S.-China
trade tensions, an index of Latam stocks jumped
4.3%. Its currency counterpart surged 1% after
both indexes ended lower last week.
    Oil firms Petrobras and Ecopetrol
 climbed between 3.1% and 7.2% as crude prices rose,
while iron ore miner Vale rallied 6.3% for its best
day in 10 months.
    Currencies of oil exporters Brazil, Mexico and
Colombia firmed between 1.3% and 1.5%, with the Mexican
peso touching a more than four-week high.
    Chile, the world's largest producer of copper, saw its peso
 climb 1%, while stocks were on track for their
biggest one-day gain in three weeks. Copper prices surged almost
2%. 
    Outbreak hot-spots such as Italy reopened shops and
restaurants, while New York and Spain plan to lift restrictions 
gradually. In Mexico, automotive, mining and construction
sectors will be told in 72 hours if they can resume operations,
the government said.
    But the regional picture remained grim, with a central bank
survey showing Brazil's economy is expected to shrink by more
than 5% this year.
    The political scenario in Brazil remained precarious too,
with health minister Nelson Teich resigning on Friday, as he and
President Jair Bolsonaro showed themselves increasingly out of
step, with Bolsonaro calling for a rollback of state quarantines
and for the widespread use of unproven drugs, such as
chloroquine, to fight the virus.
    "This increases uncertainty about how the pandemic will
develop in Brazil and how it will affect the economy, and the
BRL is therefore likely to remain under depreciation pressure
for the time being," said Commerzbank analyst You-Na Park-Heger.
    Teich is the second minister to leave a post in Bolsonaro's
government after Justice Minister Sergio Moro quit last month
over differences with the president. 
    Argentina's peso marked a fresh low against the dollar
with risk of a sovereign debt default looming. Argentina
received three new counter-offers from creditors late on Friday
with the deadline to restructure $65 billion in foreign debt
lapsing on Friday.
    "We believe the authorities will continue to signal progress
in the negotiations, with talks continuing after the
aforementioned deadline, to limit the economic impact of a
default," said analysts at Citi Research.  
    
    Key Latin American stock indexes and currencies at 1449 GMT:
  Stock indexes           Latest   Daily %
                                   change
 MSCI Emerging Markets     910.79     1.07
                                   
 MSCI LatAm               1607.43     4.32
                                   
 Brazil Bovespa          80242.13     3.46
                                   
 Mexico IPC              36506.99     2.29
                                   
 Chile IPSA               3738.96     3.22
                                   
 Argentina MerVal        40682.61    3.286
                                   
 Colombia COLCAP          1068.31     1.38
                                   
                                          
      Currencies          Latest   Daily %
                                   change
 Brazil real               5.7594     1.35
                                   
 Mexico peso              23.5930     1.42
                                   
 Chile peso                 819.8     0.78
                                   
 Colombia peso            3858.32     1.20
                                   
 Peru sol                  3.4208     0.44
                                   
 Argentina peso           67.8100    -0.12
 (interbank)                       
                                   
 
 (Reporting by Susan Mathew in Bengaluru; Editing by Dan
Grebler)
  
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