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LatAm stocks up 1.9%; FX up 0.3%
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Brazil's central bank expected to keep rates at 15%
(Updates with afternoon trading)
By Pranav Kashyap and Sukriti Gupta
Nov 5 (Reuters) - Most Latin American currencies and
stocks rose on Wednesday, as risk-on sentiment returned to
global markets following a sell-off in the previous session,
while investors awaited Brazil's interest rate decision.
A sharp rebound in U.S. private payrolls in October also
aided sentiment. Meanwhile, the lawyer representing U.S.
President Donald Trump's administration faced tough questions
from the Supreme Court over the legality of the sweeping
tariffs.
The real rose 0.7%, while stocks in Sao Paulo
climbed to a record high, up 1.6%, and were set to log their
11th consecutive day of gains, the longest streak since July
2024.
Brazil's central bank is widely expected to hold the Selic
rate at 15%, a near two-decade high, keeping pressure on
stubborn inflation that is still overshooting its 3% target.
A towering yield gap over the U.S. Federal Reserve's
3.75%-4% target range has supercharged carry trades and foreign
inflows, helping the real, which is up 15% year-to-date.
But with growth showing signs of cooling, investors will
dissect the central bank's statement for hints of when cuts
might finally come, potentially not until 2026, and how
vulnerable the currency remains to shifts in U.S. policy and
risk appetite.
"The Brazilian central bank has been conducting monetary
policy in a consistent and right direction because inflation has
shown some stubbornness throughout the year. The strong monetary
restriction is really domesticating Brazilian inflation," said
Alfredo Coutino, director for Latin America at Moody's
Analytics.
"My impression is that (the bank) will keep the policy rate
at 15% in nominal terms until the end of this year."
Latin American assets are riding a wave of global portfolio
rebalancing this year, as investors pivot away from U.S. markets
in search of higher yields and calmer political waters.
Countries like Brazil and Chile have emerged as favorites,
not only for their attractive interest rates, but also for
offering a relatively quieter political backdrop and more
predictable macro environments.
Valuation fears resurfaced this week on Wall Street and in
Asia that have had record-breaking runs this year, driven
primarily by enthusiasm for artificial intelligence.
An index tracking the region's equities rose
1.9%, hitting its highest since January 2024, while a similar
gauge for currencies ticked up 0.3%.
The Mexican peso gained 0.4%, while equities,
up 1.8%, hit an all-time high.
Unlike Brazil, Mexico's central bank is primed to cut rates
on Thursday, as Banxico looks to jump-start an economy that
could have shrunk in the third quarter.
Recent data showed headline inflation cooled more than
expected in mid-October, but a sticky core still sits above the
3% target. A poll showed Mexico's headline inflation is expected
to ease in October, further adding to bets for a rate cut.
Chile heads into a pivotal vote in less than two weeks, with
ruling-coalition contender Jeannette Jara leading ahead of the
November 16 first round, a recent poll suggests. Chile's peso
rose 0.4%, while the local stock index added
1.2%.
Argentine stocks declined 1.5%, while the local peso
added 0.3%. Argentina's central bank cut its one-day
peso repo rate by 300 basis points to 22%, Bloomberg News
reported.
Colombia's main stock index hit a fresh peak, up
0.9%, while the peso gained 0.8%.
Key Latin American stock indexes and currencies:
Equities Latest Daily %
change
MSCI Emerging Markets 1385.15 -0.59
MSCI LatAm 2621.36 1.98
Brazil Bovespa 153102.76 1.59
Mexico IPC 63563.9 1.88
Chile IPSA 9432.13 1.17
Argentina Merval 3032909.57 -1.55
Colombia COLCAP 2036.53 0.9
Currencies Latest Daily %
change
Brazil real 5.3609 0.67
Mexico peso 18.5846 0.43
Chile peso 943.17 0.35
Colombia peso 3832 0.84
Peru sol 3.369 0.44
Argentina peso (interbank) 1449.5 0.3
Argentina peso (parallel) 1420 -8.8
(Reporting by Pranav Kashyap and Sukriti Gupta in Bengaluru;
editing by Mark Heinrich and Shilpi Majumdar)
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