(Updates with weekly loss; updates prices) By Sruthi Shankar Sept 20 An index of Latin American currencies fell on Friday, set for its first weekly loss in three, as optimism over a fresh round of stimulus for emerging economies was offset by doubts about progress in U.S.-China trade talks. MSCI's index of Latin American currencies fell 0.4% with Brazil's real hovering at two-week lows. The real was on course to lose nearly 2%, in part after Brazil's central bank cut its interest rate to a record low on Wednesday and signaled room for further easing. Currencies in the region have been hit by geopolitical worries this week following attacks on Saudi Arabia's key oil facilities, while the U.S. Federal Reserve's mixed signals about further interest rate cuts dampened the appetite for risky assets. The Colombian peso dropped nearly a percent, leading losses in the region ahead of Colombia's central bank meeting on Monday. A large majority of analysts expect borrowing costs to be on hold at 4.25% for the rest of the year. "With the recent newsflow having been relatively strong on the activity side (and benign on the inflation side), we do not expect a more dovish tone yet," Citi analysts wrote in a note. On the trade front, a Chinese delegation canceled planned visits to two U.S. farm states after the United States lifted tariffs overnight on over 400 Chinese products. China cut its new one-year benchmark lending rate for the second month in a row and India's government announced deep cuts in corporate taxes to revive flagging growth, both aiding risk sentiment earlier in the day. The broader Latin American currencies index was set to log losses of about 1.8% for the week, while its equities counterpart was down 0.5% on the week. The Bovespa, however, rose 0.3%, led by a 7.2% jump in shares of petrochemical company Braskem SA after a report that Brazilian conglomerate Odebrecht SA had hired the investment banking unit of Lazard to sell its stake in Braskem. Sao Paulo banks, hit by expectations of lower interest rates, recovered from sharp falls on Thursday. The Argentine peso and the Merval stock index dropped, while bonds rose after the government submitted a debt renegotiation framework bill to Congress on Thursday, lending some clarity to how Argentina will respond to its latest financial crisis. Stock markets in Chile were shut for a public holiday. Latin American stock indexes and currencies at 1900 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1020.23 0.36 MSCI LatAm 2691.74 -0.07 Brazil Bovespa 104680.40 0.33 Mexico IPC 43509.35 1.14 Chile IPSA 0.00 0 Argentina MerVal 30007.17 -1.339 Colombia IGBC 12912.67 -0.4 Currencies Latest Daily % change Brazil real 4.1583 0.09 Mexico peso 19.4608 -0.05 Chile peso 713.55 0.00 Colombia peso 3414.9 -0.98 Peru sol 3.358 -0.12 Argentina peso (interbank) 56.6600 -0.14 (Reporting by Sruthi Shankar in Bengaluru Editing by Leslie Adler)
Sept 20 European stocks clocked their fifth straight week of gains on Friday with investors buying into the oil and gas and banking sectors, and Novo Nordisk rising after U.S. approval of its oral diabetes drug.
(Updates throughout, changes prices) By Sruthi Shankar Sept 19 Brazil's real currency dropped to a two-week low on Thursday, lagging its Latin American peers, after the central bank cut interest rates to a new record low and signaled room for further easing. The real slid 1.3% to 4.1545 per dollar, its weakest level since September 4, after the rate-setting committee, known as Copom, cut rates to 5.50% on Wednesday in the face of an uncertain global economic outlook and tame domestic inflation. Although the cut was in-line with market expectations, the central bank forecast inflation next year to be only 3.80%, below its official target of 4.00% despite modeling with a weak currency and lower interest rate. Citi economists expect rates to be cut by 50 basis points at each of the next two meetings, bringing borrowing costs, known as the Selic interest rate, to 4.5% at year end, and stay on hold throughout 2020. "It will take renewed optimism on a China deal to give a stronger bid to EMFX, including the BRL," they said. Brazil's Bovespa stock index held steady as shares in Petrobras rose 1% after the state-run oil firm hiked the average price of gasoline at refineries by 3.5% and the price of diesel by 4.2%, a company representative told Reuters. Telecommunications firm Oi was up 1.3%, after sources said it was in talks with Spain's Telefonica and Italy's Telecom Italia to sell its mobile network to avoid insolvency. While expectations of lower interest rates helped retailers and real estate companies, banks were deep in the red. The benchmark Bovespa index, at 104538.49, is less than 2% from its all-time high. Other Latin American currencies including Mexico's peso and Colombia's peso edged lower against the dollar. Currencies im the region took a hit on Wednesday after the U.S. Federal Reserve cut rates as expected, but gave mixed signals about further cuts. Mexican stocks were mostly flat, while those in Colombia edged 0.6% lower. Markets in Chile were shut for a public holiday. Latin American stock indexes and currencies at 1927 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1015.91 -0.53 MSCI LatAm 2689.39 -0.89 Brazil Bovespa 104538.49 0.01 Mexico IPC 43088.05 0.04 Chile IPSA - - Argentina MerVal 30227.46 0.52 Colombia IGBC 12943.92 -0.56 Currencies Latest Daily % change Brazil real 4.1545 -1.26 Mexico peso 19.4480 -0.26 Chile peso 713.55 0.00 Colombia peso 3381.5 -0.25 Peru sol 3.354 -0.12 Argentina peso (interbank) 56.5700 -0.09 (Reporting by Sruthi Shankar Editing by Alistair Bell)
* Swiss lenders gain after SNB raises negative rate threshold (Updates to close)
(Recasts following Federal Reserve decision; updates prices) By Sruthi Shankar Sept 18 Latin American currencies and stocks lost steam on Wednesday after the U.S. Federal Reserve lowered interest rates as expected, but doubts about further rate cuts prompted investors to cut exposure to risky assets. With the U.S. dollar broadly strengthening after the release of the Fed's policy statement, the Brazilian real led losses among the regional currencies with a 0.7% decline ahead of a rate decision from Brazil's central bank. The Fed cut rates by 25 basis points, its second this year, citing global risks and "weakened" business investment and exports. New projections also showed policymakers at the median expected rates to stay within the new range through 2020, driving investors to cut bets on further U.S. rate cuts. The projections are shown as dots on a graphic. "These dots emphasize the characterization of the recent cuts as a "mid-cycle adjustment," Thomas Simons, senior money market economist at Jefferies, wrote in a note. "Even the most dovish policymakers have dots that are no lower than 1 rate cut away from the current level." Emerging market assets have benefited this year as major central banks moved to ease monetary policy in the wake of a bruising trade war between the United States and China that has put the world economy at the risk of a recession. Brazil's central bank, Copom, is expected to cut its benchmark interest rate to a new low on Wednesday, according to a Reuters poll of economists, as it tries to boost a lackluster economic recovery and prevent inflation from falling too far below target. Since Copom cut rates at the end of July, central bank president Roberto Campos Neto has said several times that low inflation and a "benign" outlook provide room for further policy "adjustment." Stock markets took a beating. Brazil's Bovespa, Mexico's IPC and Colombian shares were down between 0.3% and 1%, while MSCI's index of Latin American stocks fell 0.6%. Mexico's peso edged lower, while the Colombian peso outperformed its regional peers even as oil prices extended losses for a second day after Saudi Arabia said it would quickly restore full production following last weekend's attacks on its facilities and as U.S. crude stockpiles rose unexpectedly. Markets in Chile were shut for a public holiday. Latin American stock indexes and currencies at 1922: Stock indexes Latest Daily % change MSCI Emerging Markets 1020.30 0.13 MSCI LatAm 2704.67 -0.6 Brazil Bovespa 104252.09 -0.35 Mexico IPC 42987.52 -1.06 Chile IPSA 5072.93 0.06 Argentina MerVal 29709.77 -1.462 Colombia IGBC 12936.40 -0.53 Currencies Latest Daily % change Brazil real 4.1056 -0.69 Mexico peso 19.4150 -0.27 Chile peso 713.55 0.00 Colombia peso 3372.2 0.29 Peru sol 3.35 -0.36 Argentina peso (interbank) 56.5150 -0.03 (Reporting by Sruthi Shankar in Bengaluru Editing by Leslie Adler)
European shares ended flat on Wednesday, as gains for the defensive real estate and utilities sectors were countered by losses in luxury good makers, with caution prevailing ahead of the U.S. Federal Reserve's interest rate decision.
(Updates throughout) By Sruthi Shankar Sept 17 Brazil's real turned positive and the Mexican peso hit a session high on Tuesday after Saudi Arabia's energy minister said the kingdom will restore its lost oil output by the end of September after a weekend attack disrupted 5% of global output. In response, oil prices slumped about 7%, while main stock markets in Brazil and Mexico rose sharply as the latest news eased worries about a supply shock in oil markets hurting global growth. Oil prices surged 20% at one point on Monday, prompting investors to flee riskier assets but helped stocks in Colombia, whose top export is oil. The Colombia SE General index was back down 0.3%, while the country's currency weakened 0.6% against the dollar. Saudi Energy Minister Prince Abdulaziz bin Salman said on Tuesday the kingdom had managed to restore oil supplies to the levels where they were prior to the weekend attacks by drawing from oil inventories. The Brazilian real traded up 0.07% at 4.0765 per dollar, while Mexico's peso strengthened by as much as 0.47% to trade at 19.3489 per dollar. However, currencies moved in tight ranges ahead of the U.S. Federal Reserve's two-day policy meeting set to conclude on Wednesday. The central bank is expected to cut interest rates for the second time this year. Focus was also on Brazil's central bank meeting this week. Officials are widely expected to cut record-low rates by 50 basis points in order to shore up Latin America's largest economy. "Low inflation, subdued activity and continued fiscal consolidation progress bode well for a 50bp policy rate cut this week," Gustavo Rangel, chief economist, Latam at ING said in a note. "An additional 50bp cut that brings the SELIC rate (overnight rate) to 5% in October is also likely, but we expect a mid-cycle pause after that." Brazil's Bovepsa gained 0.7% as banking shares jumped. Airlines such as Gol Linhas Aereas Inteligentes and Azul SA, which took a hit on Monday on worries about higher fuel costs, rose 5.8% and 3.5% respectively. The MSCI's index of Latin American stocks jumped 0.7%. Latin American stock indexes and currencies at 2006 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1020.19 -0.67 MSCI LatAm 2726.90 0.65 Brazil Bovespa 104408.36 0.7 Mexico IPC 43447.93 1.42 Chile IPSA 5072.93 0.06 Argentina MerVal 30114.29 -1.463 Colombia IGBC 12978.77 -0.3 Currencies Latest Daily % change Brazil real 4.0765 0.07 Mexico peso 19.3756 0.33 Chile peso 713.55 -0.60 Colombia peso 3382.1 -0.59 Peru sol 3.338 -0.15 Argentina peso (interbank) 56.4900 -0.37 (Reporting by Sruthi Shankar and Agamoni Ghosh in Bengaluru; Editing by Dan Grebler)
European stocks closed marginally lower on Tuesday as energy shares gave up a chunk of Monday's big gains and banks lost steam ahead of a likely interest rate cut from the U.S. Federal Reserve.
Oil and gas companies stood out in a gloomy session for European stock markets on Monday as an attack on Saudi Arabia's oil facilities thrust crude prices higher, while heightening geopolitical concerns among investors.
* Deutsche Bank gains after U.S. settlement (Updates to close)
Hong Kong police stormed a shopping mall where pro-democracy activists had taken their protest, chanting "fight for freedom" and "liberate Hong Kong" after activists trashed fittings at the rail station next door.