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Brazil and Mexico rate decisions due this week
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Argentina's agro export revenue plunges in October
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Chile's economic activity up 3.2% in September
(Updates with afternoon trading)
By Nikhil Sharma and Sukriti Gupta
Nov 3 (Reuters) - Latin American assets opened November
on a strong footing on Monday, kicking off a pivotal week packed
with key data and monetary policy decisions from regional
economic powerhouses Brazil and Mexico.
MSCI's regional stock gauge was up 0.5%,
tracking a global rally on optimism about a U.S.-China trade
truce. A parallel index for local currencies
also rose 0.5%.
"What ultimately is helping the appreciation of other
currencies against the dollar is the idea that the global growth
narrative can improve... getting along with China and trying to
minimize any damage to each other is actually a very good sign
for the rest of the globe," said Juan Perez, director of trading
at Monex.
Regional markets ended October with modest gains after a
roller-coaster ride as shifting global rate expectations and
geopolitical tensions shaped investor sentiment.
Argentina was a stand-out last month, as its stocks
skyrocketed following a surprise victory for President Javier
Milei's party in midterm elections, bolstering investor
confidence in his economic overhaul and signaling continued
support from Washington.
The main stock index surged a record 44.5% last week
and extended its rally on Monday, rising another 3.8% to a new
high.
The local peso was down 2.3%. The country's
agricultural export revenue dropped 56% in October from a year
earlier to $1.12 billion.
In Brazil, economists see the central bank holding the Selic
at a near two-decade high of 15% on Wednesday.
While high interest rates are helping to rein in inflation,
which remains above the target range, they are beginning to
weigh on the economic activity.
"We don't expect really strong equity gains until interest
rates are much lower than they are now. But the high rates will
be good for the currency," said Jon Harrison, managing director
of EM macro strategy at TS Lombard.
The country benchmark Bovespa index was up 0.45%,
while the real currency added 0.32%. A survey showed
contraction in factory activity eased in October amid cooling
cost pressures.
Mexico also braced for a rate-setting announcement due
Thursday, with consensus favoring a continuation of the easing
cycle in view of slowing inflation and a weak economy.
This would mark the Bank of Mexico's 12th reduction since it
began a cycle of easing in early 2024. Mexican equities
slipped 0.8% and the local peso added 0.3%.
Investors will also sift through Mexico's key inflation,
industrial output and consumer confidence data, scheduled for
release later this week.
In other regional economies, the Colombian peso added
0.1%. Colombia's central bank held the benchmark rate at 9.25%
last week amid inflation uncertainty and favorable economic
data.
Chile's currency jumped 0.5% as economic activity
grew 3.2% in September compared to a year earlier, boosted by
gains in trade and services.
Key Latin American stock indexes and currencies:
Stock indexes Latest Daily %
change
MSCI Emerging Markets 1409.76 0.59
MSCI LatAm 2585.98 0.46
Brazil Bovespa 150227.93 0.46
Mexico IPC 62262.88 -0.81
Chile IPSA 9511.78 0.88
Argentina Merval 3119637.71 3.89
Colombia COLCAP 1987.12 -0.18
Currencies Latest Daily %
change
Brazil real 5.3576 0.3
Mexico peso 18.477 0.35
Chile peso 937.07 0.54
Colombia peso 3854.64 0.08
Peru sol 3.375 -0.31
Argentina peso (interbank) 1478.5 -2.35
Argentina peso (parallel) 1425 -9.12
(Reporting by Nikhil Sharma and Sukriti Gupta; Editing by Jan
Harvey and Shilpi Majumdar)
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