(Updates with afternoon trading)
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Investors seek to find footing after last week's declines
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Regional sentiment lifted by Fed rate cut hopes
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Brazil's Lula leads potential right-wing rivals ahead of 2026 vote, poll shows
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Court orders Bolsonaro to start serving coup plot sentence
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S&P Global says financing conditions to remain benign
By Niket Nishant and Twesha Dikshit
Nov 25 (Reuters) - Latin American stocks and currencies rose on Tuesday as hopes of a December interest rate cut by the Federal Reserve and a rebound in global risk appetite prompted traders to cautiously rebuild positions after last week's rout.
The MSCI index tracking regional stocks rose 1.2%, mirroring upbeat global market sentiment. A broader index of regional currencies climbed 0.5% as a weaker U.S. dollar following a slew of mixed economic data reinforced expectations for the Fed to cut rates.
Developments in recent sessions, including the release of delayed official U.S. data after the government shutdown, shifting expectations for a Fed rate cut, and signs of progress toward a possible Ukraine peace deal, have largely dictated sentiment across global markets.
Emerging markets, in particular, have remained vulnerable to global and U.S. triggers, as seen in last week's selloff on concerns about overvalued AI-focused stocks on Wall Street and uncertainty about the Fed's policy outlook.
"We assume financing conditions for emerging markets remain benign in 2026, as the Fed continues to cut rates and the recent weakness in the U.S. dollar is broadly sustained," analysts at S&P Global wrote in a note.
"Favorable financing conditions, combined with low unemployment levels and improving real wages, will help domestic demand remain relatively robust in 2026 in most emerging markets."
DIVERGENCE IN REGIONAL PERFORMANCE
In Brazil, the Bovespa pared early gains to add 0.33%, while the real also strengthened 0.3% against the greenback.
Data showed
foreign direct investment
inflows through October have already surpassed the 2024 total. The government expects FDI to reach a record high this year, which should help offset a worsening current account balance in Latin America's largest economy.
Brazil faces a presidential election next year, with a
recent poll
giving President Luiz Inacio Lula da Silva a favorable lead against all potential right-wing challengers.
Former President Jair Bolsonaro, who lost to Lula in 2022, is barred from running. Brazil's Supreme Court on Tuesday ordered Bolsonaro to start serving his sentence of 27 years and three months in prison over a coup-plotting case.
Colombia's peso weakened 0.55% against the dollar, while equities climbed 1.2%.
State-run energy company Ecopetrol on Monday warned that natural gas supply to the country's northern and central regions could be at risk due to an ongoing roadblock at its Guajira field.
Argentine stocks climbed 2.7% after data showed economic activity grew 5.0% in September from the same month last year, more than double the 2.2% projected by analysts.
The local currency peso fell 1.54% against the greenback.
Mexican stocks rose 0.83%, while the peso strengthened 0.61%. Data released by the national statistics agency on Tuesday showed flat retail sales in September compared to August.
Elsewhere, Bolivia is negotiating multilateral financing that will exceed $9 billion for public and private projects, Economy Minister Jose Gabriel Espinoza said in the first major policy announcement since President Rodrigo Paz took office this month.
Key Latin American stock indexes and currencies:
Stock indexes
Latest Daily % change
MSCI Emerging Markets 1355.52 1
MSCI LatAm 2652.69 1.16
Brazil Bovespa 155803.85 0.33
Mexico IPC 63039.44 0.83
Chile IPSA 9950.81 1.51
Argentina MerVal 2836986.06 2.73
Colombia COLCAP 2024.08 1.22
Currencies Latest Daily % change
Brazil real 5.3716 0.31
Mexico peso 18.3732 0.61
Chile peso 934.74 0.46
Colombia peso 3808.3 -0.55
Peru sol 3.3706 0.27
Argentina peso (interbank) 1,447.0 -1.54
Argentina peso (parallel) 1,440.0 -1.05
(Reporting by Niket Nishant and Twesha Dikshit in Bengaluru; Editing by Nick Zieminski and Richard Chang)
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