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International

Susan Mathew

EMERGING MARKETS-Latam stocks gain, Russian rouble slips on Washington warning

Dec 06 2021

(Adds rouble move after Biden's warning to Putin, updates prices) By Susan Mathew Dec 6 Most Latam stocks rose, with Brazil's Bovespa index jumping almost 2% as a semblance of risk appetite returned, while Russia's rouble slipped amid talks of economic consequences from Washington over Moscow's possible offensive into Ukraine. Experts, including the top U.S. infectious disease official Anthony Fauci, said initial studies showed the Omicron variant of the coronavirus might be mild, helping some flows into risk assets. Brazilian airlines Gol and Azul surged around 10% each, while planemaker Embraer jumped 6.2% after its subsidiary received orders for 60 electric vertical takeoff and landing aircraft from two Australian companies. Infrastructure company CCR rose over 4% after a newspaper said Canadian pension fund Caisse de depot et placement du Quebec is looking to buy stake in the firm. But with little known about the Omicron variant, concerns around it still remain. Chile detected its first case of Omicron over the weekend, and its peso currency was down 0.6%. The peso is already down more than 2% this month as anxiety rises ahead of second round presidential elections on Dec. 19. Polls last week showed leftist candidate Gabriel Boric leading. Brazil's real hit a six-week low. A reshuffle in Brazil's economy ministry will put Daniella Marques - a key aide to Minister Paulo Guedes - in charge of promoting private-sector investments, a source said, in a push to combat growing financial market pessimism about the country's growth prospects. "The pandemic has pushed the fiscal accounts to an even more fragile situation, with higher public spending, lower GDP level, and less credible fiscal anchors. Thus, the fiscal policy should be in the spotlight during the 2022 presidential election," said Citigroup strategists. A 4% surge in oil prices helped currencies of crude exporters Colombia and Mexico, but Russia's rouble slipped 0.1% after a senior U.S. administration official said U.S. President Joe Biden will warn Russian President Vladimir Putin of severe economic consequences should Russia go ahead with a invasion of Ukraine. Concern of contagion from any default in China's property market intensified as China Evergrande Group set up a risk management committee, and was likely headed towards debt restructuring amid a serious liquidity crunch. In Mexico, data showed auto production and exports tumbled in November. Struggling oil company Pemex said it would issue new debt and receive a capital injection of up to $3.5 billion from the government to help manage its liabilities. Pemex's troubles have weighed on Mexico's credit ratings. Peru's sol slipped with investors watching for headlines around impeachment of leftist President Pedro Castillo who took office in July. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1213.69 -0.89 MSCI LatAm 2087.65 1.16 Brazil Bovespa 107068.14 1.9 Mexico IPC 50609.63 0.02 Chile IPSA 4369.02 -0.01 Argentina MerVal 88386.15 2.346 Colombia COLCAP 1438.73 0.47 Currencies Latest Daily % change Brazil real 5.6849 -0.12 Mexico peso 21.2078 0.26 Chile peso 846 -0.60 Colombia peso 3929.1 0.87 Peru sol 4.0749 -0.15 Argentina peso 101.2800 -0.11 (interbank) (Reporting by Ambar Warrick; Editing by Alison Williams and Marguerita Choy)

European shares bounce on hopes Omicron may be mild

Dec 06 2021

Travel stocks helped European shares mark a strong start to the week on Monday, after sharp losses late last week, boosted by hopes that the Omicron variant of the coronivirus would be mild.

EMERGING MARKETS-Latam FX weaken on Omicron worries

Dec 03 2021

* Mexican peso up almost 3% this week * Brazil industrial production disappoints * Peru's sol rises despite shutdown at Las Bambas copper mine (Updates prices) By Susan Mathew Dec 3 Most Latin American currencies weakened on Friday, as worries about the new coronavirus variant, Omicron, persisted with Mexico reporting its first case, while Brazil's real was flat ahead of a central bank policy meeting next week. The Mexican peso fell 0.5%, with officials urging calm after the Omicron case was detected. The case follows the discovery of the variant in Brazil earlier this week, its first known appearance in Latin America, a region particularly hard hit by the pandemic over the past two years. But for the week, the peso was seen climbing almost 3%, far outperforming regional peers. Brazil's real steadied. Data on Friday showed industrial production fell 0.6% in October from September. This provides early evidence that Brazil's economy may be headed for another contraction this quarter, said William Jackson, chief EM economist with Capital Economics. "This won't prevent (the central bank) from raising rates when it meets next week, but it adds to reasons to think that they won't up the pace of tightening and will stick to a 150bp rise (to 9.25%)." The likely hike next week, to combat surging inflation, will have raised the benchmark Selic rate by 725 basis points this year. Meanwhile, a report from the U.S. Treasury on Friday said no major trading partners, which include several emerging market economies, engaged in currency manipulation, elimination a source of uncertainty. Peru's sol outperformed, up 0.2%, shrugging off yet another shutdown at MMG Ltd's Las Bambas copper mine from mid-December as talks to end a road blockade fail. Peru's finance ministry said on Thursday that International Monetary Fund officials had concluded there is leeway in the country's tax system for a reform to include higher taxes on the key mining sector. Uncertainty about the U.S. Federal Reserve's next move also persisted after U.S. jobs growth missed estimates by a huge margin, but the unemployment rate fell. In Chile, Congress rejected a bill to allow Chileans to make a fourth withdrawal from their pension funds, spelling the end for now of a proposal that had been criticized by the central bank and opposed by the center-right government of President Sebastian Pinera. But Chile's currency fell 0.3%, as copper prices eased. While most Latam stocks benchmarks fell, Brazil's rose 0.6%, led by fintech company Meliuz which surged 19% after stellar Black Friday sales. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1224.60 -0.94 MSCI LatAm 2071.64 -0.31 Brazil Bovespa 105129.71 0.64 Mexico IPC 50769.45 -0.31 Chile IPSA 4370.82 0 Argentina MerVal 86392.76 -1.21 Colombia COLCAP 1437.15 -0.26 Currencies Latest Daily % change Brazil real 5.6543 0.08 Mexico peso 21.3635 -0.54 Chile peso 840.9 -0.48 Colombia peso 3957.96 -0.60 Peru sol 4.0691 -0.15 Argentina peso 101.1500 -0.05 (interbank) (Reporting by Ambar Warrick and Susan Mathew Editing by Mark Heinrich and Alistair Bell)

European shares end bumpy week with losses

Dec 03 2021

(Reuters) -European shares fell on Friday, hitting session lows after a downturn in U.S. stocks on a tech slide and fears around the Omicron coronavirus variant hitting economic recovery.

EMERGING MARKETS-Latam FX recover but Omicron worries remain

Dec 02 2021

* Brazilian economy shrinks in Q3 * Mexican peso jumps 1.7% (Updates prices) By Ambar Warrick and Susan Mathew Dec 2 Most Latin American currencies firmed on Thursday, although sentiment remained fragile on uncertainty over the Omicron coronavirus variant, and as economic worries rose with data showing Brazil sank into a recession in the third quarter. Brazil's economy, Latin America's largest, contracted 0.1% in the three months to September, amid surging inflation and a severe drought. Brazil's economic rebound has sputtered as inflation surged into double digits, forcing the central bank to raise borrowing costs aggressively. This comes as investors worry about the potential economic fallout from the Omicron variant as countries ramp up measures and travel curbs. Brazil's real rose 0.3%, taking some support from expectations of improving demand for iron ore exports to China. Brazilian stocks rose 2.6%, recovering from a 13-month low. Analysts flagged some positives for the economy going into 2022, particularly for sectors yet to fully recover from the pandemic. "We expect some of the still COVID impacted services sectors (in particular services to households) to recover further in coming months in tandem with further progress on the COVID vaccination program and renewed fiscal stimulus," analysts at Goldman Sachs wrote in a note. But they also see surging inflation and political uncertainty weighing on economic activity in the coming months. Brazil's Senate on Thursday passed the main text of a constitutional amendment that will ease the government's spending cap and open room for a larger welfare program. Mexico's peso jumped 1.7%, as it recovered from a more than one-year low hit last week. Mexican President Andres Manuel Lopez Obrador's pick for the next central bank head, Victoria Rodriguez, underlined her commitment to central bank independence, days after her nomination roiled markets amid concerns over political interference. On the geopolitical front, Mexico is analyzing a range of responses to a proposed U.S. electric vehicle tax credit and would even consider applying tariffs, Mexican Economy Minister Tatiana Clouthier said on Thursday. For Argentina, a potential deal with the International Monetary Fund (IMF) to roll over some $45 billion it owes would be a key breakthrough, but not enough to lift the embattled country's credit rating, Moody's said on Thursday. Broader emerging market currencies also recovered from recent losses on Thursday, although investors were awaiting more data on the COVID front. But Turkey's lira dropped 3%. The central bank signaled it will pause rate cuts in 2022. Key Latin American stock indexes and currencies: Stock Latest Daily % change indexes MSCI Emerging Markets 1233.89 0.58 MSCI LatAm 2055.42 0.73 Brazil Bovespa 103399.30 2.6 Mexico IPC 50838.23 1.66 Chile IPSA 4364.64 0.74 Argentina MerVal 86297.17 1.33 Colombia COLCAP 1421.25 0.21 Currencies Latest Daily % change Brazil real 5.6532 0.30 Mexico peso 21.3441 0.74 Chile peso 837.2 0.08 Colombia peso 3934.2 0.75 Peru sol 4.0672 0.07 Argentina peso (interbank) 101.0900 -0.07 (Reporting by Ambar Warrick; Editing by Frances Kerry and Andrea Ricci)

European stocks fall as Omicron worries rattle investors

Dec 02 2021

(Reuters) -European shares fell more than 1% on Thursday, as countries ramped up restrictions to curb the spread of the Omicron coronavirus variant, raising worries about hits to a nascent economic recovery.

EMERGING MARKETS-Chile's peso slides over 1% on copper price worries

Dec 01 2021

* Chile's Codelco sees copper prices falling next year * Chile stocks slide 3.4% * Brazil stocks seen rebounding in 2022 - Reuters poll * Argentine stocks surge almost 6% (Updates prices) By Susan Mathew Dec 1 Chile's peso slipped 1.3% on Wednesday on the prospect of falling copper prices, while most other Latin American currencies firmed against a steady dollar. Chile's currency moved back towards seven-month lows, while the Santiago stocks index sank 3.4%, extending losses to a seventh straight session. Chile's state-owned Codelco, the world’s largest copper producer, said on Wednesday it expects copper prices to fall in a year to between $3.80 and $3.90 per pound, down from prices currently just below $4.30 per pound. Copper prices on the London Metals Exchange gave up gains to slip 0.3% after Codelco's estimate. Data on Wednesday also showed economic activity in Chile jumped 15% in October from a year ago, but missed analysts estimates. "We doubt that Chile's economy will continue to operate above its potential as several challenges to growth are emerging," said EM economist Nikhil Sanghani with Capital Economics, citing slowing growth in China, the pandemic, and a hawkish monetary policy. Meanwhile, the new Omicron variant of the coronavirus is likely to soon spread to other countries in North and South America after being detected in Canada and Brazil, the Pan American Health Organization said on Wednesday. "While the market is trying to ascertain how negative a shock Omicron may be, volatility is likely to stay high, with a negative bias for risky assets," economists at Citi wrote in a client note. "We have been negative on EMFX going into this, and Omicron should give another boost to EMFX weakness." Brazil's real slipped 0.4% to one-month lows. Most other Latam currencies rose, with rising oil prices helping Mexico's peso extend gains to a third straight session, while Colombia's peso pulled further away from 19-month lows. Stocks in the region were mixed, with Brazil's main index losing 1%, while Argentine stocks surged almost 6% - on track for their best session in 16 months. Argentina's government said that a team from the economy ministry and central bank would travel to Washington this weekend to meet with International Monetary Fund staff and push forward talks over a new deal. Brazilian Economy Minister Paulo Guedes said that the country should privatize state-run oil company Petrobras before it becomes irrelevant and oil loses value. Shares were up between 0.7% and 1%. A Reuters poll showed Brazil's stocks are likely to rebound in 2022 from this year's steep decline, as investors hunt for bargains but that political uncertainty in the run-up to the country's 2022 presidential vote could pose risks. Key Latin American stock indexes and currencies at 1435 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1228.23 1.3 MSCI LatAm 2040.08 0.16 Brazil Bovespa 100819.40 -1.08 Mexico IPC 50485.67 1.58 Chile IPSA 4332.49 -3.38 Argentina MerVal 83918.37 5.803 Colombia COLCAP 1418.68 3.26 Currencies Latest Daily % change Brazil real 5.6604 -0.44 Mexico peso 21.3684 0.32 Chile peso 837.9 -1.40 Colombia peso 3963.76 0.72 Peru sol 4.07 -0.40 Argentina peso 101.0000 -0.06 (interbank) (Reporting by Shreyashi Sanyal in Bengaluru Editing by Alistair Bell)

European shares rebound from Omicron-spurred rout

Dec 01 2021

(Reuters) -European shares posted their best session in almost six months on Wednesday, as investors picked up beaten down stocks that were hammered in the past few sessions by fears of the spread of a new and highly infectious strain of the coronavirus.

EMERGING MARKETS-Most Latam FX rally as dollar erase gains made on hawkish Powell

Nov 30 2021

* Currencies of Mexico, Colombia, Chile up between 1% and 1.9% * Colombia, Chile and Peru stock exchanges approve merger * Brazil's Guedes sees slower growth next year; BRL slips * Brazil's Anima Holding surges 22% (Updates prices) By Shreyashi Sanyal and Susan Mathew Nov 30 Most Latin American currencies rallied on Tuesday as the dollar weakened, while stocks in the region fell sharply on fresh doubts of how effective COVID-19 vaccines are against the Omicron variant. Currencies of Mexico, Colombia and Chile firmed between 1% and 1.9% as the dollar gave back gains made after hawkish comments from Federal Reserve chair Jerome Powell. Powell said inflation no longer seemed transitory and said bond purchases may be tapered sooner. "Right now there were some expectations that we'd hear a more dovish Federal Reserve, but we're not, we're hearing a more hawkish Fed, but not that hawkish to the extent that people are betting that they'll raise rates sooner next year," said Art Hogan, chief market strategist at National Securities. Mexico's peso looked to post its best session in five months, while Colombia's peso snapped a six-day losing streak and pulled away from 19-month lows. But on the month, Mexico peso lost about 4% as slowing economic growth and rising inflation amid fears surrounding the spread of the coronavirus weighed. Chile's state copper commission Cochilco said that it slightly raised its predicted copper price for this year to $4.23 per pound, supported by a rally in the metal this year. Meanwhile, the Colombian, Chilean and Peruvian stock exchanges have approved a merger into a regional holding company, creating Latam's second biggest bourse. The integration will increase the number of debt issuers, attract international participation, increase regional investment in pension funds and up the volume of derivatives. Brazil's real fell 0.7%. Brazilian Economy Minister Paulo Guedes said on Tuesday that Brazil's gross domestic product (GDP) will not grow 4.5% or 5% in 2022 due to high inflation. Stocks in Latin America came under pressure after warnings from U.S. drugmakers Moderna and Regeneron Pharmaceuticals that their COVID-19 vaccines and antibody cocktails could be less effective against the new coronavirus variant. "The emergence of a new, heavily mutated, COVID-19 variant has thrown markets into a tailspin. While the news flow around omicron will dominate market psychology in the very near-term, we think the bar to drive a truly nefarious outcome in risk markets and macro is very high," wrote Mazen Issa, senior FX strategist at TD Securities in a client note. Brazilian stocks dropped 2.2%, while Chile's IPSA index dropped as much as 3.5% before recovering some ground. Shares in Brazilian education holding company Anima Holding surged 22% after announcing a deal to sell a stake of its medical education subsidiary Inspirali to DNA Capital. Key Latin American stock indexes and currencies at 1409 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1213.67 -0.44 MSCI LatAm 2024.65 -0.97 Brazil Bovespa 100572.31 -2.18 Mexico IPC 49528.11 -0.54 Chile IPSA 4483.83 -0.48 Argentina MerVal 78159.96 -1.182 Colombia COLCAP 1356.35 0.66 Currencies Latest Daily % change Brazil real 5.6474 -0.65 Mexico peso 21.4270 1.13 Chile peso 829.4 1.81 Colombia peso 3992.2 0.93 Peru sol 4.056 -0.07 Argentina peso 100.9300 0.01 (interbank) (Reporting by Shreyashi Sanyal in Bengaluru Editing by Alistair Bell and Nick Zieminski)

Hawkish Powell comments, Omicron worries drag down European stocks

Nov 30 2021

(Reuters) -European stocks fell on Tuesday after U.S. Federal Reserve chair Jerome Powell warned U.S. inflation may not be transitory and as worries about the efficacy of existing vaccines against the Omicron COVID-19 variant weighed on investors.

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