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Stocks up 0.3%, FX rises 0.4%
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Brazil's service sector expands in November
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Brazil's president expects further US tariff cuts
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Mexican government to raise minimum wage
(Updates with afternoon trading)
By Twesha Dikshit
Dec 3 (Reuters) -
Latin American currencies hit a record high on Wednesday
against a softer dollar, while equities also advanced on growing
expectations of a U.S. Federal Reserve rate cut next week, with
regional developments remaining in focus.
MSCI's index for Latin American currencies
rose 0.41% to a record high, while the dollar index fell
0.45% as weaker-than-expected U.S. jobs data and expectations of
further rate cuts weighed on the greenback.
News that U.S. President Donald Trump's administration had
abruptly canceled interviews with finalists for the Fed chair
job raised expectations that economic adviser Kevin Hassett
would replace Jerome Powell when his term as chair ends in May
next year. The expectations of a dovish tilt led to a bout of
dollar selling that benefited EM currencies.
"To us, it's not a huge mystery that risk-taking has firmed
in the past few days. Even though the U.S. and global data have
been lackluster, it has only strengthened traders' belief that
the Fed will act on December 10 to reduce its fed funds target
rate by 0.25%," Macquarie analysts said in a note.
EM assets have outperformed most global peers this year with
a weaker dollar, cheaper equity valuations, and asset
diversification playing a favorable role in their rise.
The gap between developing nations' debt servicing costs and
new financing hit a more than 50-year high of $741 billion
between 2022 and 2024, the World Bank said.
The MSCI index tracking regional stocks
added 0.27% to hover near a six-year high, mirroring upbeat
sentiment in global equities.
BRAZIL, MEXICO UPDATES IN FOCUS
Brazilian President Luiz Inacio Lula da Silva said he
expects further U.S. tariff cuts following a phone call between
the two nations' leaders on Tuesday.
The real firmed 0.3% against the greenback, while
equities rose 0.3% to a new high, a day after the index
surpassed 160,000 points for the first time. A survey showed
Brazil's services sector returned to growth in November after
seven months of contraction.
With GDP data expected on Thursday, economic growth was
forecast to have expanded modestly in the third quarter,
according to most economists polled by Reuters.
Brazilian miner Vale rose 3.5%. The company on
Tuesday said its base metals unit is in talks with Glencore (GLCNF)
to form a copper joint venture in Canada.
Mexico's government said it would raise the minimum wage by
13% in 2026, the latest public policy from the second
consecutive leftist government aimed at helping poor workers.
The peso was little changed, while stocks
dipped 0.33%. Data showed gross fixed investment fell 0.3% in
September from the previous month, below the forecast.
Chilean equities added 0.3% while the peso
strengthened 0.43%, boosted by higher copper prices, ahead of
the Andean nation's presidential runoff in mid-December.
Chile's divided Congress will limit the agenda of either
presidential candidate who comes out on top after the December
14 runoff, supporting the country's sovereign credit quality,
Moody's said.
Argentina's S&P Merval rose 2.7%, while the peso
added 0.24%.
The Colombian peso jumped 1.57% against the dollar
while the MSCI COLCAP Index slipped 0.7%. The equity
index has outperformed most peers this year, but the rally could
face some setbacks in the run-up to the 2026 presidential
election.
Meanwhile, Poland's central bank delivered an interest rate
cut as widely expected, bringing the rate down by 25 bps to 4%
following benign inflation data.
The zloty added 0.1% while the WIG20 Index
dropped 0.73%.
Romanian stocks gained 1.15%. The country said its
military blew up a maritime drone that was endangering
navigation in the Black Sea.
Key Latin American stock indexes and currencies:
Stock indexes
Latest Daily % change
MSCI Emerging Markets 1373.79 -0.01
MSCI LatAm 2758.11 0.27
Brazil Bovespa 161631.88 0.33
Mexico IPC 63611.19 -0.33
Chile IPSA 10175.97 0.29
Argentina MerVal 3126211.61 2.75
Colombia COLCAP 2101.3 -0.68
Currencies Latest Daily % change
Brazil real 5.3115 0.3
Mexico peso 18.2733 0.01
Chile peso 918.39 0.43
Colombia peso 3757.5 1.57
Peru sol 3.36 0.2
Argentina peso (interbank) 1,452.5 0.24
Argentina peso (parallel) 1,420.0 1.73
(Reporting by Twesha Dikshit; Editing by Andrea Ricci and Nick
Zieminski)
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