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Currencies rise 1.2%, stocks climb 2.4%
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Politics in Brazil and Chile in the spotlight
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Argentina's dollar bonds edge higher
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Turkey cenbank cuts rates 150 pts to 38% on 'improving'
signals
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Peru's rate decision at 18:00 ET
(Updates with afternoon trading, adds market details)
By Niket Nishant and Nikhil Sharma
Dec 11 (Reuters) -
Latin American assets climbed on Thursday, with regional
currencies on track for their strongest session in eight months
as the dollar weakened following an interest rate cut by the
U.S. Federal Reserve.
Higher-yielding currencies in the emerging markets often
benefit when the Fed cuts rates, as investors seek alternative
destinations to park capital.
The MSCI index for Latin American currencies
rose 1.24%, its strongest level since April 11, while the stocks
gauge jumped 2.4% - its best performance since
August 22.
Brazil's real led the gains after its central bank
left interest rates at a near two-decade high on Wednesday and
stuck to its hawkish tone. It was last up 1.2% against the
dollar.
The Chilean peso also firmed 1%, extending its strong
run in the week leading up to the presidential run-off on
Sunday, where far-right candidate Jose Antonio Kast is expected
to win.
Peruvian equities jumped 1.6% to an
all-time high, while the currency sol was largely
unchanged as the country braced for a rate decision, likely to
result in a "hold" verdict.
POLITICS, DATA TEMPER RISK IN BRAZIL
Brazil's Bovespa index rose 0.4% having traded in
tight ranges this week after Senator Flavio Bolsonaro, the
eldest son of former President Jair Bolsonaro, confirmed his
intention to run for president next year, dashing hopes for a
more market-friendly contender such as Sao Paulo Governor
Tarcisio de Freitas.
"Political volatility is a reason not to have as large a
trade in Brazil as you might normally want, but the
macroeconomic story is still very favorable," said David Hauner,
head of global emerging markets fixed income strategy at BofA
Global Research.
"Brazil is the one big emerging market that has a fiscal
issue. And a favorable election scenario is one where you get an
administration that is going to be focusing on some fiscal
consolidation."
Data on Thursday showed retail sales volumes unexpectedly
rose in October, despite signs of a slowdown in Latin America's
largest economy amid high interest rates.
Separately, Mexican equities climbed 2.5% to an
all-time high. The Senate on Wednesday approved tariff hikes of
up to 50% on imports from China and several other Asian
countries, aiming to bolster local industry despite opposition
from business groups.
Argentina's dollar-denominated bonds were largely stable, a
day after the government raised $1 billion through a bond sale
as it prepares for an eventual return to international capital
markets.
The main stock index fell 1.1% after data showed the
monthly inflation rate edged up more than expected in November.
The peso stayed largely steady.
Meanwhile, an Inter-American Development Bank report said
Latin America and the Caribbean could lift per-capita output by
11% and cut inequality by 6% by making markets more competitive.
The report cited weak competition as a central reason for
decades of inconsistent productivity.
Elsewhere, Turkey's central bank lowered its policy rate by
150 basis points to 38%, cutting at the higher end of
expectations, amid signals that disinflation is back on track
after summer price pressure.
The main BIST 100 share index rose 0.4%, while
the local currency lira was little changed.
Key Latin American stock indexes and currencies:
Stock indexes
Latest Daily % change
MSCI Emerging Markets 1378.53 -0.29
MSCI LatAm 2743.63 2.37
Brazil Bovespa 159701.61 0.39
Mexico IPC 64975.94 2.47
Chile IPSA 10362.84 1.89
Argentina MerVal 2979466.56 -1.13
Colombia COLCAP 2111.06 -0.41
Currencies Latest Daily % change
Brazil real 5.4033 1.27
Mexico peso 18.028 0.71
Chile peso 913.2 1
Colombia peso 3804.75 0.77
Peru sol 3.3679 0.01
Argentina peso (interbank) 1,436.0 0.14
Argentina peso (parallel) 1,430.0 1.38
(Reporting by Niket Nishant in Bengaluru; Editing by Alison
Williams and Deepa Babington)
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