October 31, 2018 / 3:09 PM / a month ago

EMERGING MARKETS-Latam markets to end October higher, bucking trend

    By Susan Mathew
    Oct 31 (Reuters) - Latin American stocks and currencies
dropped on Wednesday, but were set to log monthly gains in
October, in contrast with other emerging markets, thanks to
domestic factors that have kept them resilient to worries about
global growth and trade. 
    The MSCI index of Latin American currencies
is on pace to clock monthly gains of more than 1 percent, while
the stock index is set to log a more than 2.5
percent rise, both outpacing the broader emerging market indexes
which are poised to end October lower.
    Optimism over the presidential election in Brazil, an
International Monetary Fund bail-out for recession-hit
Argentina, and a new trade deal between Mexico, United States
and Canada, have kept sentiment in the region largely buoyed
through the month.
    For the day, rising U.S. yields drove the dollar to a
16-month peak and pushed the Mexican peso to an over
four-month low. Recent political anxiety has taken some gains
from the currency, which has outperformed most others this year.
 
    Latin American stocks edged lower, with Brazil stocks
 falling sightly led by financial and energy sectors that
drove a 3.7 percent gain for the benchmark on Tuesday. Argentine
shares declined 0.9 percent.
    But stocks in Mexico rose 1.3 percent tracking a higher Wall
Street, which added to the strong handover from Asian and
European equities.
   "It's primarily a case of month-end flows rather than a turn
around in direction," said Christian Lawrence, a senior market
strategist with Rabobank.
    Investors in Brazil markets will be watching for results of
the central bank's meeting later in the day at which it is
expected to keep the benchmark interest rate at an all-time low
of 6.5 percent after far-right lawmaker Jair Bolsonaro's victory
in the presidential election bolstered the currency.
    The real was about 0.7 percent lower at 1445 GMT, but
is on track to gain more than 8 percent this month, while Brazil
stocks look set to post a 10 percent rise.
    "Markets have certainly taken a positive approach to
Bolsonaro's victory, so I think we'll see stabilization around
current levels," Lawrence said.
    However, Brazil is far from immune to broad-based stress, he
warned. 
    
 Key Latin American stock indexes and currencies at 1447 GMT:
 Stock indexes                            Daily %      YTD %
                                           change     change
                              Latest               
 MSCI Emerging Markets           953.06      1.79     -19.18
                                                   
 MSCI LatAm                     2650.39         0      -6.29
                                                   
 Brazil Bovespa                86822.84     -0.07      13.64
                                                   
 Mexico IPC                    44083.63      1.25     -10.68
                                                   
 Chile IPSA                     5082.16      1.32       1.32
                                                   
 Argentina MerVal              29173.67     -0.86      -2.97
                                                   
 Colombia IGBC                 12572.36       0.6      10.57
                                                   
                                                            
 Currencies                               Daily %      YTD %
                                           change     change
                                 Latest            
 Brazil real                     3.7218     -0.86     -10.98
                                                   
 Mexico peso                    20.3060     -1.30      -2.99
                                                   
 Chile peso                       698.6     -0.73     -12.02
                                                   
 Colombia peso                  3222.05     -0.56      -7.45
 Peru sol                         3.367     -0.18      -3.86
                                                   
 Argentina peso (interbank)     36.3500      1.07     -48.83
                                                   
        

 (Reporting by Susan Mathew in Bengaluru;
Editing by Susan Thomas)
  
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