October 5, 2018 / 8:48 PM / 18 days ago

CORRECTED-EMERGING MARKETS-Latam FX firm, stocks slide after U.S. jobs data

 (Corrects milestone in third paragraph to say emerging markets
stock index fell to its lowest since May 2017, not its lowest
level in three and a half weeks)
    By Susan Mathew
    Oct 5 (Reuters) - Latin American currencies benefited from a
pull back in the dollar on Friday, with the Argentine peso
firming about 2 percent, although stocks mirrored a decline in
global markets as U.S. Treasury yields rose after the jobs
report did little to tame bets of further interest rate hikes.
    The dollar weakened after data showed U.S. job growth slowed
more sharply than expected in September, although a steady rise
in wages suggested moderate inflation pressures, signaling the
Federal Reserve would continue its gradual pace of rate hikes.

    U.S. government yields rose on the data, weighing on Wall
Street and markets globally, with MSCI's emerging markets stock
index falling 1 percent to its lowest level since May
2017. The index is down 4.5 percent this week in its worst
showing since early February.
    Brazil's Bovespa was 0.6 percent lower on the day,
led by a 1.1 percent slide in iron ore miner Vale.
    A more than 2 percent drop in Argentina's Merval was
the index's seventh decline in eight sessions, while a fourth
straight day of losses sent Mexico's IPC to its lowest
level in seven weeks.
    "Emerging markets are pacing the U.S., not lagging," said
Robert Lutts, President and Chief Investment Officer at Cabot
Wealth Management Inc.
    "I think the biggest reason is that institutional money is
de-risking. They are taking money out of perceived high risk
emerging markets even as the currencies improve. They are kind
of in the protect and be defensive mode."
    Among currencies, Mexico's peso climbed more than 1
percent for its best session in three weeks, while the Argentine
peso strengthened more than 2 percent on more note sales
by the central bank. The currency tacked up about 9 percent this
week - its biggest weekly gain in more than a
decade.
    Brazil's real rose slightly in jittery trade, going
into a weekend that is expected see a very tight first-round of
the presidential elections.
    The vote is widely expected to go into a run-off later this
month, with polls oscillating between predicting a win for the
market-preferred conservative candidate, Jair Bolsonaro, and his
main rival, Fernando Haddad from the leftist party.
    "We believe that investors could be willing to give the
benefit of the doubt to Bolsonaro, even if he may lack the
experience or support to push critical fiscal reforms through
Congress," Barclays said in a note.
    "Conversely, a winner from the left could trigger some
significant adjustment in asset prices and overall market
expectations, due to the candidates' resistance to addressing
core problems in fiscal accounts," the bank added.
    The real is on track to clock a weekly gain of more than 4.5
percent - its biggest since March 2016. 
    Key Latin American stock indexes and currencies at 2001 GMT:
 Stock indexes                           Daily %    YTD %
                                          change   change
                             Latest               
 MSCI Emerging Markets         1000.53     -0.97   -12.78
                                                  
 MSCI LatAm                    2644.27      0.24    -6.72
                                                  
 Brazil Bovespa               82455.36      -0.6     7.92
                                                  
 Mexico IPC                   48088.28     -1.22    -2.57
                                                  
 Chile IPSA                    5260.00     -1.24    -1.24
                                                  
 Argentina MerVal             30237.22     -2.24     0.57
                                                  
 Colombia IGBC                12428.43     -0.79     9.30
                                                  
                                                         
 Currencies                              daily %    YTD %
                                          change   change
                                Latest            
 Brazil real                    3.8538      0.06   -14.03
                                                  
 Mexico peso                   18.8360      1.39     4.58
                                                  
 Chile peso                      677.2     -0.27    -9.24
                                                  
 Colombia peso                 3029.75      0.11    -1.58
 Peru sol                        3.324      0.12    -2.62
                                                  
 Argentina peso (interbank)    37.8000      1.59   -50.79
                                                  
 Argentina peso (parallel)        37.5      1.33   -48.72
                                                  
 
    

 (Reporting by Susan Mathew in Bengaluru; Editing by Sandra
Maler)
  
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