July 7, 2020 / 2:21 PM / a month ago

EMERGING MARKETS-Latam stocks retreat after risk rally; Mexican peso leads FX losses

    * Chile's peso supported by strong export data
    * Mexican peso pressured by weak oil
    * Brazil's real leads FX gains

    By Ambar Warrick
    July 7 (Reuters) - Mexico's peso dropped on Tuesday,
tracking weak oil prices while major Latin American stocks came
off four-month highs as a recent risk rally paused for breath. 
    While positive economic data had spurred several sessions'
gains in Latin American markets, a continued uptick in global
coronavirus cases kept caution alive.
    Regional currencies were pressured by safe-haven flows into
the U.S. dollar.
    "After a hot start, risk is in retreat. We think the market
is largely in a waiting game over a multitude of issues related
to COVID-19 and politics. That will take time and at a minimum
suggests choppy price action for the foreseeable future,"
analysts at TD Securities wrote in a note. 
    Mexico's peso fell about 0.9% to the dollar, tracking
weakness in the crude market as rising cases cast doubts over
oil demand.
    Further clouding an economic recovery from COVID-19, a top
Mexican health official said the country's coronavirus pandemic
could last until next April.
    Brazil's real strengthened the most among regional
peers, but stayed within a trading range observed over the past
week. Improving economic fundamentals in the country have come
in stark contrast to a continued rise in new infections, with
Brazil standing as the second-worst hit country in the world by
the pandemic after the United States, in terms of infections.
    Brazilian stocks fell slightly, coming off a
four-month high. Iron ore miner Vale SA was among the
top drags on the Bovespa, after it flagged a $400 million
impairment charge related to the planned sale of its
long-troubled nickel and cobalt operations on the Pacific island
of New Caledonia.
    Latin American stocks have benefited more from recent
liquidity measures, in comparison to currencies, which have been
pressured by record-low borrowing rates and sustained dollar
    Chile's peso was propped up by data showing increased
copper exports in June, while total exports also rose from last
    A recent rally in copper prices has also helped the peso,
given that the red metal is Chile's largest export.
    Chilean stocks fell about 1.5% from a near
four-month high.
    Key Latin American stock indexes and currencies:
    Stock indexes             Latest      Daily % change
 MSCI Emerging Markets         1054.03               -0.61
 MSCI LatAm                    1978.48               -0.89
 Brazil Bovespa               98787.96               -0.15
 Mexico IPC                   37719.46               -0.44
 Chile IPSA                    4218.17               -1.55
 Argentina MerVal                 0.00                   0
 Colombia COLCAP               1125.55               -0.35
       Currencies             Latest      Daily % change
 Brazil real                    5.3200                0.58
 Mexico peso                   22.5380               -0.94
 Chile peso                      794.7                0.53
 Colombia peso                 3631.42                0.12
 Peru sol                       3.5437                0.00
 Argentina peso                70.8700               -0.07

 (Reporting by Ambar Warrick in Bengaluru; Editing by Sandra
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