EMERGING MARKETS-Brazil's real outshines Latam FX on commodities boost

BY Reuters | ECONOMIC | 05/17/24 10:54 AM EDT

      Latam stocks up 0.4%, FX adds 0.3%

      Both indexes eye weekly gains

    By Shashwat Chauhan
       May 17 (Reuters) - Brazil's real outpaced peers on
Friday, tracking higher commodity prices, while most other
currencies lagged as a recent rally fueled by optimism that the
U.S. Federal Reserve could start cutting interest rates soon
appeared to dissipate.
    Brazil's real appreciated 0.4% against the dollar as
prices of iron ore, one of the country's top exports, jumped on
brighter demand outlook in top commodities consumer China.

    China announced "historic" steps to stabilise its crisis-hit
property sector, with the central bank facilitating 1 trillion
yuan ($138 billion) in extra funding and easing mortgage rules,
and local governments set to buy "some" apartments.
    "Unlike previous efforts to stimulate housing demand,
however, the current round of measures includes plans for local
governments and state firms to step in and buy up unsold homes,"
said Julian Evans-Pritchard, head of China economics at Capital
    "This could provide a more meaningful boost to home sales if
the scheme is backed up with sufficient funding. A lot remains
unclear, but the early details are encouraging."
    Mexico's peso rose 0.3% to trade at 16.6 per dollar,
on track for its third successive weekly advance.
    The Chilean peso held steady at 898.41 per dollar
after rising for the last four sessions, set for a fifth
straight weekly gain.
    Colombia's peso lost 0.2% in thin trading, while
Peru's sol dipped 0.7%.
    Most Latin American currencies eyed weekly gains as risk
sentiment flourished this week after data on Wednesday showed
U.S. consumer prices increased less than expected in April,
bolstering hopes that the Fed could kick-start its policy easing
cycle as early as September.
    As of 10:32 a.m. EDT (1432 GMT), MSCI's index for Latin
American currencies gained 0.3%, while a gauge
for stocks advanced 0.4%. Both indexes were on
track for modest weekly gains.

    Brazil's main stock index shed 0.2%, as losses in
energy and information technology shares weighed.
    Energy firms 3R Petroleum and Enauta
said they had reached an agreement to merge in an all-stock
deal. 3R's shares rose over 3%, and Enuata was last up close to
    Bourses in Mexico, Chile, Colombia
 and Peru rose between 0.1% and 0.4% early
on, while Argentinian stocks dipped.

    ** Brazil's central bank chief says he cannot anticipate
future rate cuts
    ** Chile central bank to cut interest rate to 6% in May,
poll suggests

    Key Latin American stock indexes and currencies:

    Stock indexes             Latest    Daily % change
 MSCI Emerging Markets         1100.15            0.14

 MSCI LatAm                    2502.74            0.37

 Brazil Bovespa              128001.57           -0.22

 Mexico IPC                   57616.05            0.27

 Chile IPSA                    6672.89            0.32

 Argentina MerVal           1480817.09          -0.036

 Colombia COLCAP               1423.68            0.44

       Currencies             Latest    Daily % change
 Brazil real                    5.1110            0.37

 Mexico peso                   16.6180            0.31

 Chile peso                      898.2           -0.09

 Colombia peso                  3833.7           -0.25
 Peru sol                       3.7419           -0.59

 Argentina peso               886.5000            0.00

 Argentina peso                   1080            1.85

 (Reporting by Shashwat Chauhan in Bengaluru; editing by
Jonathan Oatis)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.