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Sruthi Shankar

EMERGING MARKETS-Asia leads emerging stocks higher as trade tensions ease

5:26am EST

Dec 12 Asian stock markets led gains in emerging markets on Wednesday as signs of an easing of U.S.-China trade tensions boosted investors' appetite for risk, while the dollar held near a one-month high, capping gains in many developing world currencies.

EMERGING MARKETS-Latam currencies firm on trade hopes, Brazil stocks jump

Dec 11 2018

By Agamoni Ghosh and Sruthi Shankar Dec 11 Latin American currencies strengthened against a broadly weaker U.S. dollar on Tuesday, while Brazil's main equity index jumped after three days of losses as risk sentiment improved on news of continued trade talks between the United States and China. The greenback weakened amid speculation that the U.S. Federal Reserve would pause its rate increases sooner than previously thought, helping MSCI's index for Latin American currencies gain 0.7 percent. "Falling oil prices, the U.S. and China hitting a pause on further trade escalation, and the Fed hinting at a possible slowing in the pace of rate hikes in 2019 are potentially good news for emerging markets (excluding oil exporters)," Goldman Sachs analysts wrote in a client note. Beijing and Washington discussed a road map for the next stage of their trade talks, during a telephone call between Vice Premier Liu He and U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer. Brazil's real snapped a five-day losing streak, also helped by its central bank's move to improve liquidity in the foreign exchange market by selling repurchase agreements of $1 billion. The country's benchmark stock index rose over 1.2 percent in a broad-based rally led by shares of financial and energy companies. State-owned utility giant Centrais Eletricas Brasileiras was the top gainer on the index after the company said an injunction obtained by labor unions to suspend the effects of a privatization auction of its distribution unit in Amazonas will not invalidate the result of the bidding. Vale, the world's largest iron-ore producer gained over 2 percent on higher iron ore prices, while Petroleo Brasileiro S.A. also gained as oil prices edged higher. The Mexican peso and the Colombian peso were up between 0.4 percent and 0.5 percent. Argentina's peso climbed 0.4 percent higher ahead of the central bank's monetary policy meeting later in the day. Key Latin American stock indexes and currencies at 1337 GMT Stock indexes daily % YTD % change change Latest MSCI Emerging Markets 967.38 0.48 -16.89 MSCI LatAm 2549.12 1.77 -11.43 Brazil Bovespa 86956.12 1.21 13.81 Mexico IPC - - - Chile IPSA 5056.19 0.42 0.42 Argentina MerVal - - - Colombia IGBC - - - Currencies daily % YTD % change change Latest Brazil real 3.9020 0.38 -15.09 Mexico peso 20.1730 0.63 -2.35 Chile peso 676.9 0.15 -9.20 Colombia peso 3175.7 0.44 -6.10 Peru sol 3.365 0.09 -3.80 Argentina peso (interbank) 37.5000 0.53 -50.40 (Reporting by Agamoni Ghosh and Sruthi Shankar in Bengaluru)

EMERGING MARKETS-India recovers as trade fuels emerging market bounce

Dec 11 2018

Dec 11 Emerging stock markets rose on Tuesday, led by a boost for China from signs of more trade dialogue with the United States, while Indian markets steadied after a dive sparked by the abrupt departure of central bank Governor Urjit Patel.

EMERGING MARKETS-Mexican peso dips on trade worries, president-elect inauguration

Nov 30 2018

By Sruthi Shankar Nov 30 The Mexican peso weakened on Friday on market caution ahead of trade talks between U.S. President Donald Trump and his Chinese counterpart, and the inauguration this weekend of a new leftist president. The Brazilian real was little changed, but was expected to remain volatile as traders sought to influence the month-end Ptax rate that is used as a benchmark for futures contracts. Investors, concerned about a protracted U.S.-China trade war that has roiled financial assets for much of the year, played down expectations that the meeting between Trump and Chinese President Xi Jinping at the G20 Summit on Saturday will resolve trade tensions between the two countries. "We don't think there will be anything concrete on the trade talks with Trump and Xi. The best-case scenario would be some sort of ceasefire," said Morten Lund, an analyst with Nordea Markets in Denmark. Market sentiment this month has been largely driven by the meeting on Saturday on concerns that a lack of resolution in trade tensions will hurt world economic sentiment. Mexican President-elect Andres Manuel Lopez Obrador's decision to cancel a partially-built airport for Mexico City in late October has left investors wondering how he will manage the economy. He will give an inauguration speech on Saturday. "AMLO (Lopez Obrador) is taking office and it is with a lot of nervousness that the markets are looking at it," Lund said. The latest minutes from Mexico's central bank meeting showed policymakers thinking it was "indispensable" to hike interest rates to counter confusion over future policies. Despite the peso's intraday losses, the currency was on track to post its first gain in nine weeks as the U.S. dollar has come under pressure after dovish comments from the Federal Reserve chief Jerome Powell. The signing early on Friday of a revised U.S.-Mexico-Canada trade pact had little impact on the currency's trajectory. The real was down nearly 3 percent for the month as skepticism built over President-elect Jair Bolsonaro's efforts to reduce Brazil's high fiscal deficit, including plans for an overhaul of the pension system. The country's main Bovespa index edged higher, hitting a new record high. Shares of Cosan SA Industria e Comércio rose more than 2.5 percent after the energy company announced a tender offer to repurchase $100 million of its U.S. shares. Key Latin American stock indexes and currencies at 1348 GMT: Stock indexes daily % YTD % change change Latest MSCI Emerging Markets 995.65 -0.24 -13.85 MSCI LatAm 2626.31 -0.12 -7.03 Brazil Bovespa 89785.54 0.08 17.52 Mexico IPC - - - Chile IPSA 5149.69 -0.13 -0.13 Argentina MerVal - - - Colombia IGBC - - - Currencies daily % YTD % change change Latest Brazil real 3.8575 -0.02 -14.11 Mexico peso 20.2930 -0.31 -2.93 Chile peso 670 -0.12 -8.26 Colombia peso - - - Peru sol - - - Argentina peso (interbank) - - - (Reporting by Sruthi Shankar in Bengaluru Editing by Susan Thomas)

EMERGING MARKETS-Latam currencies advance on signs of cautious Fed

Nov 29 2018

By Sruthi Shankar Nov 29 The Mexican peso and Brazilian real climbed on Thursday, together with most of their emerging market peers, as the dollar came under pressure a day after the U.S. Federal Reserve Chairman Jerome Powell eased worries about swifter interest rate hikes. The peso extended overnight gains to touch an eight-day high against the dollar after Powell said on Wednesday that U.S. rates were "just below" a so-called neutral level, leading to bets that a rising trend in U.S. rates may be coming to an end. Investors also shrugged off a warning from Mexico's central bank on Wednesday about the incoming leftist government's policies sparking a loss of confidence in the country. The Chilean and the Colombian pesos gained as hopes of moderation in the pace of U.S. interest rate hikes boosted appetite for risky assets, including emerging markets. "The risk of Fed hikes has been dialed back in the wake of Powell's comments," said Koon Chow, FX strategist at UBP in London, adding that emerging market currencies have the benefit of trading at cheap levels. The Brazilian real also gained for a third straight session, reversing earlier losses and building on increases spurred by its central bank's sale of repurchase agreements to improve liquidity in the foreign exchange markets. Analysts pointed to volatility as traders sought to influence the month-end Ptax rate that is used as a benchmark for futures contracts. An advance in the real was also capped by concern about a delay in the Senate vote on a future offshore oil auction that could raise an estimated 130 billion reais ($33.90 billion). Senate President Eunice Oliviera said on Wednesday the so-called transfer of rights bill was facing resistance from the current government as a proposal to split the proceeds with states could violate a government spending cap. Brazil's main stock index Bovespa rebounded after initially opening lower, helped by an 8 percent jump in Brazilian toll road operator CCR SA after it announced a deal with Sao Paulo prosecutors to pay 81.53 million reais ($21.20 million) to settle a case against its subsidiaries. Key Latin American stock indexes and currencies at 1408 GMT: Stock indexes daily % YTD % change change Latest MSCI Emerging Markets 998.33 0.67 -14.4 MSCI LatAm 2609.21 0.97 -8.63 Brazil Bovespa 89640.02 0.44 17.33 Mexico IPC - - - Chile IPSA 5130.47 0.32 0.32 Argentina MerVal - - - Colombia IGBC - - - Currencies daily % YTD % change change Latest Brazil real 3.8506 -0.27 -13.95 Mexico peso 20.2222 0.34 -2.59 Chile peso 669.5 0.85 -8.19 Colombia peso - - - Peru sol - - - Argentina peso (interbank) - - - ($1 = 3.8343 reais) (Reporting by Sruthi Shankar in Bengaluru, additional reporting by Claudia Violante in Sao Paulo; Editing by Bernadette Baum)

EMERGING MARKETS-Brazil's real gains for second day on central bank support, peso firms too

Nov 28 2018

By Sruthi Shankar Nov 28 The Brazilian real firmed for a second day on Wednesday, aided by a central bank move to improve market liquidity, and the Mexican peso also edged higher, rebounding from recent declines. The real gained 0.53 percent after Brazil's central bank offered $1 billion in dollar repurchase agreements, on top of its $2 billion offer on Tuesday, which sold out. "BRL's underperformance over the past week has been related to a USD liquidity shortage onshore, and these auctions should help to retrace the upward move in USDBRL," James Lord, lead Morgan Stanley analyst on emerging markets, wrote in a note. Aside from liquidity issues and concerns about President-elect Jair Bolsonaro's efforts to reduce Brazil's budget deficit, trade disputes and rising U.S. interest rates have battered the real alongside other emerging market currencies. In the forefront of investors' minds this week are trade talks between U.S. President Donald Trump and Chinese President Xi Jingping at the upcoming Group of 20 Summit, with any positive news likely to boost risk sentiment. "That's the big thing. I'm not sure the market's got any great expectations out of that meeting. There's a potential for positive headlines but no radical changes to the status quo," said Paul Fage, senior emerging markets strategist at TD Securities in London. U.S. Federal Reserve Chief Jerome Powell was set to speak at 12 p.m. EST (1700 GMT), with investors looking for hints on how many times the Fed will raise rates next year as tighter monetary conditions across the globe hit capital inflows into emerging markets. The Mexican peso rose 0.5 percent ahead of a quarterly inflation report from its central bank, adding to gains after Mexican Foreign Minister Luis Videgaray said the country's economy minister would sign the new North American trade pact agreed to in August. Despite the gains, the currency is trading near five-month lows against the dollar amid concerns about President-elect Andres Manuel Lopez Obrador's stewardship. Many banks are forecasting a weaker peso next year and lower growth, partly because of concern about economic policy under Lopez Obrador, who takes office on Dec. 1. "We think that the bank will cut its 2019 growth forecast ... given the worsening in investment prospects on the back of the cancellation of the construction of the Mexico City airport," Alonso Cervera, Credit Suisse analyst, wrote in a note. Among stocks, Brazil's benchmark Bovespa stock index gained 0.5 percent, as shares of steelmakers rose on a recovery in the metal's price in China. Companhia Siderurgica Nacional rose 1.9 percent, Usiminas Siderurgicas de Minas Gerais SA gained 2 percent and Vale SA, the world's largest iron ore miner, was up 1.7 percent. The latest Reuters poll showed the Bovespa stock index extending this year's rally into 2019 to end the year at 107,500. The index is up nearly 12 percent this year, bolstered by Bolsonaro's victory in the presidential elections. Key Latin American stock indexes and currencies at 1355 GMT: Stock indexes daily % YTD % change change Latest MSCI Emerging Markets 989.38 0.94 -15.39 MSCI LatAm 2561.28 0.91 -10.25 Brazil Bovespa 88365.59 0.54 15.66 Mexico IPC - - - Chile IPSA 5115.13 -0.25 -0.25 Argentina MerVal - - - Colombia IGBC - - - Currencies daily % YTD % change change Latest Brazil real 3.8555 0.50 -14.06 Mexico peso 20.3788 0.45 -3.34 Chile peso 671.2 0.57 -8.43 Colombia peso - - - Peru sol - - - Argentina peso (interbank) - - - (Reporting by Sruthi Shankar in Bengaluru; editing by Jonathan Oatis)

EMERGING MARKETS-Real, peso retrace losses after sharp declines

Nov 27 2018

By Sruthi Shankar Nov 27 The Brazilian real rose more than 1 percent on Tuesday, a day after suffering its worst losses in more than 18 months, while Mexico's peso stemmed a three-day run of declines even as the dollar strengthened broadly. The currencies took a beating on Monday as political uncertainties, trade worries and expectation of higher U.S. interest rates sent Latin American assets tumbling. The real rose to 3.897 to the dollar on Tuesday, after Brazil's central Bank announced an auction of $2 billion on Tuesday aimed at providing liquidity to the markets at a time when companies usually send funds abroad. "The development yesterday in BRL was very unusual. We don't think BRLUSD should be at 3.90, we see it a bit lower," said Michael Bolliger, head of EM Asset Allocation at UBS Global Wealth Management in Zurich. "There's some seasonality here. Companies might send dividends back to their headquarters and trading has not been super-liquid and maybe it looks a lot worse that it actually is." Investors are focused on the team that Brazilian President-elect Jair Bolsonaro is forming and specifically on the new government's efforts to reduce Brazil's high fiscal deficit, including plans for an overhaul of the pension system. The main Bovespa index also recovered after two days of losses, supported by financial stocks. The Mexican peso gained 0.5 percent, with Mexico's incoming finance minister assuring investors that he would push for a larger primary budget surplus next year. The country's main stock index closed at its lowest level since March 2014 amid concerns about policies under President Andres Manuel Lopez Obrador's incoming leftist government as well as tensions on the U.S.-Mexico border. "You have a narrative in Mexico that is increasingly concerning for outside investors. It's a broad narrative about policy and political uncertainty," Bolliger added. The global backdrop was not favorable too, investors said. The dollar rallied against a basket of major currencies after U.S. President Donald Trump said that he would push ahead with tariffs on Chinese goods ahead of a high-stakes meeting between the presidents of both the countries at a G20 summit in Argentina over the weekend. Key Latin American stock indexes and currencies at 1428 GMT Stock indexes daily % YTD % change change Latest MSCI Emerging Markets 978.69 0.22 -15.7 MSCI LatAm 2498.07 0.13 -11.79 Brazil Bovespa 85963.35 0.49 12.51 Mexico IPC - - - Chile IPSA 5120.67 -0.25 -0.25 Argentina MerVal 31392.67 0.84 4.41 Colombia IGBC - - - Currencies daily % YTD % change change Latest Brazil real 3.8910 0.63 -14.85 Mexico peso 20.4178 0.97 -3.52 Chile peso 676.7 0.00 -9.17 Colombia peso - - - Peru sol - - - (Reporting by Sruthi Shankar in Bengaluru Editing by Susan Thomas)

EMERGING MARKETS-Brazil's real, Mexico's peso weaken on local factors

Nov 26 2018

By Sruthi Shankar Nov 26 The Brazilian real and Mexican peso weakened against the dollar on Monday on local factors, even as the greenback stayed under pressure and the euro advanced on reports Italy may cut its budget deficit target to satisfy the European Union. Mexico's peso edged 0.3 percent lower as caution prevailed ahead of the results of a referendum on President-elect Andres Manuel Lopez Obrador's new projects. Brazil's real slid on a lack of dollar inflows triggered in part by expectations of higher U.S. rates. The peso has been battered by worries about perceived policy missteps by Lopez Obrador's team. After holding an informal referendum in late October that drew only about 1 percent of Mexican voters, Lopez Obrador said he would cancel a partly built airport for the Mexican capital. The leftist, who takes office on Dec. 1, put 10 campaign promises, including a railway line in southern Mexico and plans to transfer cash to the young and elderly, up for vote in a separate informal public consultation over the weekend, Nov. 24-25. "I think the markets are nervous about this and are going to be closely watching for what the results are," said Edward Glossop, emerging markets economist at Capital Economics, London, specializing in Latin America. Credit Suisse analysts expect voter turnout at around 600,000 and a majority of voters to favor all 10 of Lopez Obrador's proposals. Brazil's real fell for a fourth day, partly because of a year-end move by multinationals' local units to shift funds to their headquarters, said Jose Faria Junior, director of brokerage Wagner Investimentos. "Beyond that, the calendar is still pretty full this week and next, above all in the U.S., with investors looking for signs of the Fed's rate plans," he said. The real fell more than 1 percent to near a two-month low against the dollar. "Part of the weakness that we've seen recently is a reversal in some of the gains that we saw after Bolsonaro's election. The markets were very upbeat about the prospects of reform under Bolsonaro," Glossop said. Brazil's main Bovespa jumped as retail stocks including Via Varejo and Magazine Luiza gained after better-than-expected sales performance on Black Friday. Key Latin American stock indexes and currencies at 1432 GMT: Stock indexes daily YTD % change % Latest change MSCI Emerging Markets 977.72 0.88 -16.34 MSCI LatAm 2540.75 -0.66 -9.56 Brazil Bovespa 86536.23 0.35 13.26 Mexico IPC - - - Chile IPSA 5140.49 - - Argentina MerVal 30990.96 0.87 3.08 Colombia IGBC 11902.79 - 4.68 Currencies daily YTD % change % Latest change Brazil real 3.8822 -1.56 -14.65 Mexico peso 20.4390 -0.19 -3.62 Chile peso 678 -0.37 -9.34 Colombia peso 3237.95 -0.38 -7.90 Peru sol 3.379 -0.03 -4.20 (Additional reporting by Claudia Violante in Sao Paulo; Editing by Jeffrey Benkoe)

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