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Stocks up 0.9%, currencies flat
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Investors eye Honduras elections, US-Venezuela tensions
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Brazil's Bovespa tops 164,000 points
(Updates with afternoon trading)
By Niket Nishant
Dec 4 (Reuters) - Latin American stocks extended gains
on Thursday, driven by growing expectations that the U.S.
Federal Reserve will begin lowering interest rates soon, while
investors also focused on key regional developments.
MSCI's index of LatAm equities climbed
0.9% to hit a near six-year high, on pace to extend its winning
streak to a third day.
A parallel index for regional currencies
gave up early gains to trade slightly lower on the day,
following an eight-day winning streak driven by elevated bets on
a quarter-point U.S. rate cut next month.
Lower U.S. rates typically weaken the dollar and spur demand
for higher-yielding assets, including many Latin American
currencies.
Although December is usually a subdued period for markets,
investors have been juggling several factors, including shifting
rate-cut expectations, persistent geopolitical tensions in
Ukraine despite diplomatic efforts, and a series of local
political and economic developments.
In Latin America, attention is focused on an increasingly
contentious presidential race in Honduras between conservative
candidate Nasry Asfura, backed by U.S. President Donald Trump,
and centrist rival Salvador Nasralla. Nasralla has alleged fraud
in the presidential vote after Asfura pulled narrowly past him
overnight.
Honduran dollar-denominated bonds were little changed on
Thursday.
BRAZILIAN EQUITIES HIT RECORD HIGH
Brazil's Bovespa rose 1.4% and surpassed 164,000 points
for the first time after data showed that the economy slowed
more than expected in the third quarter, boosting expectations
of rate cuts early next year. The real was steady against
the dollar.
"We expect the economy to slow further in 2026 and with
inflation set to continue falling. We think Copom (Monetary
Policy Committee of Brazil's central bank) will shift to
interest rate cuts at its meeting in January," analysts at
Capital Economics said in a note.
Brazil's
trade surplus
fell 13.4% in November from the same month last year,
official data showed, landing almost in line with economists'
estimates.
Meanwhile, Brazilian Congressman Gervasio Maia, sponsor
of the 2026 budget guidelines bill, proposed excluding up to 10
billion reais ($1.9 billion) from next year's fiscal target for
state-owned companies.
Chile's main stock index was flat, while the
local peso rose 0.1%. Chilean mining giant SQM
slipped 2.6% after raising approximately $430 million in a bond
sale.
Mexican equities and the peso were up 0.1%
and 0.3%, respectively. Trump could decide next year to withdraw
from the United States-Mexico-Canada trade agreement, Politico
reported, citing U.S. Trade Representative Jamieson Greer.
In Argentina, equities slipped 0.3%. The peso
rose 0.86%, while most dollar bonds were slightly
higher.
Argentine officials are starting to prepare the country's
return to international bond markets by the start of 2026,
Bloomberg News reported on Wednesday, citing people familiar
with the matter.
The International Monetary Fund said the country must adjust
its monetary and exchange-rate policies to build reserves and
regain access to international capital markets.
Colombian stocks steadied and the peso
was up 0.1% against the greenback.
Additionally, investors are monitoring developments in
Venezuela amid aggressive rhetoric between Trump and Venezuelan
President Nicolas Maduro.
U.S. pressure on Venezuela has been building, including
strikes against alleged drug-smuggling boats and threats of
military action.
Key Latin American stock indexes and currencies:
Stock indexes
Latest Daily % change
MSCI Emerging Markets 1376.13 0.23
MSCI LatAm 2788.85 0.9
Brazil Bovespa 164062.18 1.43
Mexico IPC 63670.79 0.12
Chile IPSA 10179.37 0.03
Argentina MerVal 3118995.85 -0.33
Colombia COLCAP 2107.44 0.08
Currencies Latest Daily % change
Brazil real 5.3068 0.02
Mexico peso 18.231 0.27
Chile peso 917.3 0.12
Colombia peso 3794 -0.84
Peru sol 3.3596 0.01
Argentina peso (interbank) 1,441.0 0.86
Argentina peso (parallel) 1,410.0 2.08
(Reporting by Niket Nishant in Bengaluru
Editing by Nick Zieminski and Diane Craft)
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