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IMF raises 2025 EM growth outlook to 4.1% from 3.7%
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Chile expected to cut interest rate by 25 bps
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EM corporate debt spread hits 2008 low
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Grupo Mexico reports profit bump as copper costs shrink
(Updates with afternoon levels)
By Ankita Yadav and Ragini Mathur
July 29 (Reuters) - Latin American currencies were
mixed, while stocks broadly rose on Tuesday, as investors
monitored regional developments ahead of the looming U.S. tariff
deadline and central bank meetings scheduled for this week.
On Monday, U.S. President Donald Trump said that countries
failing to negotiate separate trade deals with the United States
would soon face tariffs ranging from 15% to 20%, surpassing the
10% base rate floated in April.
Developing economies, including Brazil, Mexico, India and
South Africa, are scurrying to clinch deals with the U.S. to
escape the sweeping duties that have clouded the outlook for
markets that have done well this year.
In another potentially significant development, U.S.
Commerce Secretary Howard Lutnick said natural resources not
grown domestically, including coffee and cocoa, could receive
tariff exemptions once trade deals are struck with producing
countries.
However, he offered no clarity on imports from nations
without U.S. agreements, such as Brazil.
Brazil supplies a third of the coffee used in the U.S. and
that trade could be heavily impacted if 50% tariffs are indeed
imposed.
Brazilian real was 0.3% higher in the day after three
straight sessions of losses. The government has asked the U.S.
to exclude food products and Embraer's (ERJ) aircraft from
duties, a source familiar with the matter told Reuters.
The Bovespa index gained 0.5%, with Embraer (ERJ) up 4.1%
On the flip side, Chilean peso was down 0.3%, ahead
of a local interest rate decision where economists expect the
central bank to cut its key rate by 25 basis points to 4.75%.
"The most important factor in Chile is that the central bank
probably will anticipate an additional rate cut later this year
and also into 2026 with the rates reaching neutral level," said
Andres Abadia, chief LatAm economist at Pantheon Macroeconomics.
"I have to say that there is a lot of uncertainty in the
outlook for the country, as U.S. tariffs risk potential slower
growth in Chile, which is a relatively open economy."
Crude producer Colombia's peso gained 0.9% tracking
oil prices that advanced for a second consecutive day, while
Mexico's peso was flat.
Among equities, MSCI's Latam equities index
edged up 0.7%. Mexican stocks added 1.3%, boosted by a
2.6% jump in Grupo Mexico after the mining and
transportation conglomerate reported a 10% jump in quarterly net
profit.
Argentina's Merval index jumped 4% to its highest
level in eight weeks, boosted by energy giant YPF.
The International Monetary Fund raised its outlook for
economic growth across emerging markets for this year to 4.1%
from 3.7%, driven by front-loading and a more upbeat view on
China.
However, the organization warned that additional tariffs on
Brazil would lead to a steeper slowdown in activity than
currently projected.
Meanwhile, an index tracking the premium to hold emerging
market corporate debt fell below 250 basis points, their lowest
levels since before the 2008 financial crisis, as investors
lapped up a recent flurry of issuance, reflecting increased
confidence in their ability to repay debt.
Key Latin American stock indexes and currencies:
Latin American market prices
from Reuters
MSCI Emerging Markets 1252.55 -0.23
MSCI LatAm 2245.13 0.70
Brazil Bovespa 132825.64 0.53
Mexico IPC 57825.4 1.3
Chile IPSA 8122.54 0.6
Argentina Merval 2302123.98 4
Colombia COLCAP 1757.87 -0.26
Brazil real 5.5722 0.29
Mexico peso 18.7509 -0.03
Chile peso 970.88 -0.34
Colombia peso 4140 0.89
Peru sol 3.55 -0.2
Argentina peso (interbank) 1290 0.39
Argentina peso (parallel) 1300 1.52
(Reporting by Ankita Yadav, Purvi Agarwal, Ragini Mathur and
Johann M Cherian in Bengaluru; Editing by Andrea Ricci and Leroy
Leo)
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