April 7, 2020 / 2:36 PM / 2 months ago

EMERGING MARKETS-Latam assets extend gains as slowing coronavirus cases brew optimism

    By Ambar Warrick
    April 7 (Reuters) - Latin American assets extended their
recovery into a second session on Tuesday, as risk assets were
propped up by hopes that the coronavirus outbreak had peaked in
several hotspots. 
    Data showing that new infections were slowing across several
U.S. states, coupled with a lower rate of deaths in several
European countries, led many to believe that the virus would
    Regional stocks shot up in tandem with gains in developed
world equity markets, with Brazil's Bovespa surging
around 7%.
    State-run oil and gas behemoth Petroleo Brasileiro
, one of the largest stocks on the Bovespa, added
nearly 7% after it approved lower oil production in April than
from the same month a year ago.
    Chilean stocks gained about 1.8%, while Colombian
stocks added 3%.
    Still, the gains were a fraction of what was lost over a
month-long rout due to the outbreak. Economic damage from the
outbreak is yet to be reflected fully, with a swathe of dismal
business activity figures last week only heralding much worse
    Investors have also raised questions over whether measures
taken by major Latin American governments to combat the virus
will suffice. Economic growth in the region was already strained
at the beginning of the year, and is likely to get worse due to
the outbreak.
    Mexico's peso rose sharply, bouncing back from a
record low touched on Monday as markets balked at the country's
measures to combat the economic shock from the coronavirus.

    "Mexico's economy is likely to plunge deeper into recession
this year, even as the federal government's belated measures to
control the spread of the coronavirus will add to growing risks
ahead," TS Lombard wrote in a note.
    "The peso will test new record lows as the Covid-19
healthcare crisis mounts, forcing Banxico to remain conservative
on its rate-cutting cycle ahead."
    Brazil's real added 1.3%, while the Chilean peso
 rose 1.6%. The MSCI's index of Latin American currencies
 was set to firm for a second straight session,
as it recovered from a more-than four year low.
    Key Latin American stock indexes and currencies at 1319 GMT
    Stock indexes             Latest       Daily % change
 MSCI Emerging Markets          882.75                  3.39
 MSCI LatAm                    1666.00                  5.86
 Brazil Bovespa               78602.04                  6.11
 Mexico IPC                   35020.32                  1.86
 Chile IPSA                    3788.07                  1.06
 Colombia COLCAP               1195.79                  3.07
       Currencies             Latest       Daily % change
 Brazil real                    5.2157                  1.42
 Mexico peso                   23.8800                  3.13
 Chile peso                        836                  1.70
 Colombia peso                  3891.5                  2.26
 Peru sol                       3.3698                  0.59
 Argentina peso                65.0500                 -0.09

 (Reporting by Ambar Warrick in Bengaluru; Editing by Sandra
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