May 26, 2017 / 9:21 PM / in 2 months

EMERGING MARKETS-Brazil markets up as traders bet reforms still afoot

4 Min Read

 (Updates with final prices, details from Mexico)
    By Bruno Federowski
    SAO PAULO, May 26 (Reuters) - Brazil's currency and stocks
rose on Friday as traders hoped for progress on an ambitious
reform agenda despite a growing political crisis ensnaring
President Michel Temer.
    The Brazilian real strengthened 0.54 percent, but
remained far from the two-month peaks seen before the political
scandal over bribery allegations broke out last week. 
    Brazil's benchmark Bovespa stock index rose 0.9
percent. Shares of state-controlled power utility Centrais
Elétricas Brasileiras SA rose sharply, rebounding
after ranking among the top decliners in the recent selloff.
    Efforts by Temer's administration to foster trust in plans
to streamline Brazil's pension system and reform labor laws seem
to have to borne fruit among investors. House Speaker Rodrigo
Maia has said he expects the lower house to vote on pension
reform by mid-June, clearing the way for a final Senate vote.
    That cautious optimism has rekindled bets that the central
bank would cut interest rates by a brisk 100 basis points next
week despite market volatility drive by political turmoil,
driving yields on rate futures lower.
    Also contributing to the drop were expectations of rapidly
slowing inflation after state-controlled oil company Petróleo
Brasileiro SA announced a cut on fuel prices.
    Mexico's peso closed near flat after earlier this
week reaching its strongest level against the dollar since
Donald Trump's election as U.S. president in November. The
currency has benefited from rising international crude prices.
    Mexico's IPC stock index rose by 0.56 percent, lifted
by an increase in the share price of billionaire Carlos Slim's
flagship company, telecoms giant America Movil.
    On Thursday, emerging stocks had inched to two-year highs,
supported by relatively dovish minutes from the last meeting of
the U.S. Federal Reserve. But disappointment over the scale of
oil supply cuts announced by OPEC have kept the MSCI emerging
equity index from adding significantly to gains.
    
    Key Latin American stock indexes and currencies at 2000 GMT:
 Stock indexes                 Latest         Daily  YTD pct
                                                pct   change
                                             change  
 MSCI Emerging Markets           1,016.00      0.14    17.66
                                                     
 MSCI LatAm                      2,573.08      0.86     8.99
 Brazil Bovespa                 63,772.10      0.86     5.89
 Mexico IPC                     49,688.27      0.56     8.86
 Chile IPSA                      4,892.69      0.42    17.86
 Chile IGPA                     24,545.33      0.42    18.38
 Argentina MerVal               22,146.66      2.13    30.91
 Colombia IGBC                  10,752.87      0.26     6.21
 Venezuela IBC                  73,959.10     -0.22   133.27
                                                            
 Currencies                        Latest     Daily  YTD pct
                                                pct   change
                                             change  
 Brazil real                       3.2654      0.54    -0.50
 Mexico peso                      18.5085     -0.02    12.08
 Chile peso                         672.0     -0.42    -0.19
 Colombia peso                   2,910.00     -0.27     3.14
 Peru sol                           3.274     -0.18     4.28
 Argentina peso (interbank)        16.000      0.52    -0.78
                                                     
 Argentina peso (parallel)          16.29     -0.31     3.25
                                                     
 
 (Additional reporting by Miguel Gutierrez; Editing by G Crosse)
  

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