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LatAm stocks drop 0.7%, FX down 1.1%
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Indexes set for sharp weekly losses
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US stocks recover on growing Fed cut bets
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Mexican economy shrinks in third quarter
(Updates with afternoon trading)
By Nikhil Sharma and Sukriti Gupta
Nov 21 (Reuters) - Latin American assets were heading
for sharp weekly declines on Friday, as emerging markets
remained risk-averse even as uncertainty over U.S. Federal
Reserve policy and fears of a potential AI bubble eased.
A broader index for regional equities fell
0.7% on the day and remained on course for its biggest weekly
drop since early October, down 2.6%, reflecting subdued
sentiment in emerging markets globally even as U.S. markets
stabilized after a heavy sell-off in the previous session.
After an AI-led rout on Thursday, driven by concerns over a
potentially overvalued tech sector despite Nvidia's (NVDA)
upbeat forecast, Wall Street investors added risk on Friday,
buoyed by growing bets on a December rate cut following remarks
from policymakers.
The dollar index was up 1% for the week, supported by
uncertainty after Thursday's U.S. jobs report - delayed because
of a government shutdown - painted a mixed picture of the labor
market.
MSCI's index tracking Latin American currencies
fell 1.1% and was on pace for its worst week
since early July.
Talking about the declines in Latam assets on the day,
Rachel Ziemba, founder of Ziemba Insights, said, "Latam markets
in a way are catching down to the weakness in global markets
earlier in the week" with many commodity prices, including oil
and metals, down as well.
The Brazilian real fell 1.3% and was set for its
first weekly decline in six, with a 1.9% drop, as a fall in
crude prices weighed.
The local stock index was down 0.4% on the day and
1.9% for the week, also on track for its first weekly loss in
six.
Brazil's government said that 22% of its exports to the U.S.
remain subject to a 40% extra tariff after U.S. President Donald
Trump expanded the list of exemptions to include goods such as
coffee, meat and fruit.
In Mexico, the peso fell 0.5% with data showing Latin
America's second-largest economy shrank by 0.3% in the third
quarter. The slowing economy has been the biggest reason behind
the central bank's decision to cut rates despite ongoing
concerns about core inflation.
The country's local equity index advanced 0.9%.
Separate data showed economic activity contracting 0.6% in
September from the previous month. Both the stock index and the
currency were heading for significant weekly losses.
Colombia's peso dropped 1%. The country's COLCAP
Index lost 0.2% after falling 1.5% on Thursday. Both
assets were headed for heavy weekly losses.
Chile's peso dropped 0.9%, taking its weekly losses
to 1.3%.
The Santiago stock index gained 0.3%, and was up
2.3% for the week after last Sunday's presidential vote, with
analysts seeing a potential victory for far-right candidate Jose
Antonio Kast in a December runoff, raising hopes that a
right-wing government would deliver more market-friendly
reforms.
Argentina's stock market was open but banks were closed and
the local peso did not trade on Friday.
Key Latin American stock indexes and currencies:
Equities Latest Daily %
change
MSCI Emerging Markets 1335.5 -2.63
MSCI LatAm 2612.38 -0.70
Brazil Bovespa 154844.47 -0.35
Mexico IPC 62250.28 0.94
Chile IPSA 9827.88 0.26
Argentina Merval 2763731.42 -3.045
Colombia COLCAP 2024.51 -0.23
Currencies Latest Daily %
change
Brazil real 5.4 -1.26
Mexico peso 18.4712 -0.5
Chile peso 936.75 -0.91
Colombia peso 3798.5 -1.04
Peru sol 3.385 -0.2
Argentina peso (interbank) 1424 -
Argentina peso (parallel) 1405 -7.82
(Reporting by Nikhil Sharma and Sukriti Gupta; Editing by
Kirsten Donovan and Vijay Kishore)
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