* Latam FX down 1%, stocks down 1.2%
* Mexico's economy expands 1.2% in April
* Peru's Sanchez says he won't recognize election results
* Mexico issues $6.3 billion worth of bonds
(Updates with late afternoon trading)
By Avinash P, Ragini Mathur and Purvi Agarwal
June 23 (Reuters) - Latin American stocks and currencies
were swept up in a global market selloff on Tuesday as mounting
bets on U.S. Federal Reserve interest rate hikes curbed risk
appetite, while Colombian equities extended losses following the
country's election results.
The MSCI index for Latin American currencies
and its regional stocks gauge
dropped 1% and 1.2%, respectively to their lowest levels since
June 11.
The U.S. dollar held near more than one-year highs,
adding pressure on regional currencies, as investors raised bets
on rate hikes by the Fedthis year, following a hawkish tone
struck by the central bank last week.
Money markets are increasingly expecting a second rate hike
by end-2026, compared with just one increase earlier, per
LSEG-compiled data.
U.S. 2-year Treasury yields, among the most
sensitive to shifts in interest-rate expectations, climbed to a
16-year high earlier in the session.
COLOMBIA IN FOCUS AFTER ELECTION
Colombian assets remained in focus, as right-wing lawyer
Abelardo De La Espriella was poised to become the country's next
president following a narrow election victory on Sunday.
The Colombian peso and the benchmark COLCAP stock
index have been among the region's strongest
performers this month, gaining 6.8% and 7.9% respectively, after
De La Espriella won the first round of voting in early June.
However, the assets turned volatile after Sunday's election
results. The peso reversed course to gain 0.4% on Tuesday,
trading around five-year highs, while stocks extended their
slide with a 1.9% drop.
"Abelardo de la Espriella's victory provides a temporary
relief for public finances... But to maintain investor
confidence, his administration will need to lay the groundwork
for fiscal consolidation quickly," said Lucas Ple, an emerging
countries economist at BNP Paribas.
"However, numerous hurdles remain, which may contribute to
increased volatility in financial markets over the coming
months."
Peru's leftist presidential candidate Roberto Sanchez said
he would not recognise the result of an election runoff,
alleging fraud as his conservative rival Keiko Fujimori held a
narrow lead, raising prospects of a prolonged political crisis.
Local stocks tumbled 2.1%.
In Brazil, the central bank signaled a preference for
alternating pauses with renewed easing to bring inflation back
to its 3% target by the first quarter of 2028, after cutting
rates by 25 basis points for a third straight meeting last week.
Brazilian stocks bucked regional weakness to trade
0.5% higher, while the real depreciated 0.9%.
In Mexico, data showed the economy expanded 1.2% in April,
its biggest monthly gain in more than five years and above
expectations of a 0.9% increase. Local stocks fell 0.4%,
while the peso slipped 1.2% to its lowest level in over
two months.
Mexico's finance ministry issued a combined $6.3 billion
worth of bonds in a dual-tranche sovereign deal, the finance
ministry said.
Meanwhile, investors also assessed progress in U.S.-Iran
talks aimed at ending the Middle East conflict. Washington
agreed to waive sanctions on Iran for 60 days from Monday
following an initial round of talks under a nascent peace deal
agreed last week to end more than three months of war.
Elsewhere, investors awaited MSCI's decision on whether
Indonesia would retain its emerging-market status or move closer
to a downgrade.
Key Latin American stock indexes and currencies:
Latin American market
prices from Reuters
Equities Latest Daily %
change
MSCI Emerging Markets 1735.85 -3.71
MSCI LatAm 2940.43 -1.23
Brazil Bovespa 171289.92 0.54
Mexico IPC 66854.23 -0.40
Chile IPSA 10779.67 -1.12
Argentina Merval 3235272.7 -1.29
Colombia COLCAP 2348.31 -1.88
Currencies Latest Daily %
change
Brazil real 5.1876 -0.88
Mexico peso 17.564 -1.15
Chile peso 914.2 -0.95
Colombia peso 3417 0.42
Peru sol 3.3908 -0.22
Argentina peso (interbank) 1470.5
Argentina peso (parallel) 1485 -0.67
(Reporting by Avinash P, Ragini Mathur and Purvi Agarwal in
Bengaluru; Editing by Joe Bavier and Sahal Muhammed)
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