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EMERGING MARKETS-Latam FX weakens, stocks shrug off virus fears

13 Jul 2020

* Global COVID-19 cases surpass 13 million * Chilean central bank seen holding interest rates * Latam stocks rise along with broader markets (Adds details, updates prices) By Shreyashi Sanyal and Ambar Warrick July 13 Most currencies in Latin America started the week on the back foot amid increasing coronavirus cases in the region, while the Chilean peso rose ahead of a policy meeting later in the week. Brazil's real fell 0.6%, leading declines among regional peers while oil-linked currencies including the Mexican and Colombian pesos tracked weaker crude prices. Global coronavirus infections passed 13 million on Monday, according to a Reuters tally, which also shows the disease accelerating the fastest in Latin America. The Americas account for more than half the world's infections and half the deaths. While most Latin American currencies have regained some lost ground from a steep sell-off, heightened dollar demand and loosening monetary policy have pressured regional players. Still, commodity-linked currencies have outperformed in recent weeks on some improvement in raw material prices. Regional stocks rose on the day, tracking a rally in global equities as markets awaited the U.S. earnings season. Chile's peso firmed against the dollar, with attention shifting toward a policy meeting on Wednesday. Chile's central bank is expected to leave the benchmark interest rate at 0.5% in July and keep it there for nearly two years. Opposition lawmakers in Chile late last week pushed forward a constitutional reform to allow Chileans to withdraw as much as 10% from their pension funds amid the coronavirus crisis. "Chile's central bank is likely to keep rates steady with the next policy move expected to be a hike sometime closer to 2022," said Edward Moya, senior market analyst at OANDA in New York. "The focus with Chile has mainly been on the Chamber of Deputies approval to allow Chileans to tap their retirement savings. If the bill passes, this could drag down Chilean stocks, bonds and the peso." Santiago stocks rose 2.3%, with miners leading the charge as prices of copper, Chile's main export, touched their highest in more than two years. In Costa Rica, President Carlos Alvarado on Sunday said the nation will begin negotiations with the International Monetary Fund to access a financial aid package to help offset the economic blow from the COVID-19 pandemic. Argentine stocks rose the most in the region as markets continued to watch for fresh developments in the country's debt restructuring talks. Ecuador, which is also in the process of restructuring its sovereign debt, will have to sweeten its offer to creditors, analysts said. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1074.35 0.48 MSCI LatAm 1971.68 0.03 Brazil Bovespa 100042.67 0.01 Mexico IPC 36351.37 -0.31 Chile IPSA 4124.64 2.34 Argentina MerVal 43913.55 2.728 Colombia COLCAP 1150.60 0.25 Currencies Latest Daily % change Brazil real 5.3571 -0.67 Mexico peso 22.5393 -0.43 Chile peso 786.9 0.70 Colombia peso 3619.24 -0.32 Peru sol 3.4968 0.14 Argentina peso 71.2300 -0.41 (interbank) (Reporting by Shreyashi Sanyal in Bengaluru; Editing by Tom Brown)

London stocks end higher with corporate earnings in focus

13 Jul 2020

British stocks closed higher on Monday, recovering from the prior week's losses as the focus turned to the upcoming second-quarter earnings season, although a continued rise in coronavirus cases kept sentiment subdued.

EMERGING MARKETS-Latam FX subdued by virus fears; Brazil stocks eye 4-mth closing high

10 Jul 2020

* Chilean peso set to outperform peers for the week * Argentine stocks outpace peers for the week * U.S. record rise in COVID-19 cases chokes risk appetite * Petrobras up as Mubadala set for talks to buy Bahia refinery (Adds graphic, updates prices) By Shreyashi Sanyal and Ambar Warrick July 10 Brazilian stocks were set for their strongest close in more than four months on Friday, while broader sentiment remained subdued amid increasing global coronavirus cases. The Bovespa stock index added about 0.8% after data showed inflation as measured by the IPCA consumer price index rose 0.26% in June over May, picking up after the deflation reported in the previous month. State-owned oil company Petrobras rose 1.5% after it said Abu Dhabi's investment fund, Mubadala Investment Co , will enter exclusive talks to purchase Brazil's second-largest refinery. Improving economic indicators in Brazil, Latin America's largest economy, put its stocks on course for a 3.2% weekly gain. Still, the country has the second-highest number of coronavirus infections in the world, behind only the United States. Mexico's peso and the Brazilian real rose against the dollar, but were set the end the week largely unchanged. Most other currencies moved in a flat-to-low range for the day. Chile's peso was set to outperform peers for the week, tracking strength in the copper market. Chile is the world's largest exporter of the red metal. Argentine stocks, which did not trade on Friday with the market closed for the day, outperformed their regional peers by a wide margin this week amid improving sentiment on the country's negotiations with its sovereign debt holders. Sentiment for the day was dampened as new coronavirus infections reported across the United States marked a record rise on Thursday. Rising coronavirus cases sparked worries of tighter containment measures, which could delay the economic recovery. Latam markets have rebounded sharply from a meltdown in March, but surging cases, political issues, concerns over sovereign debt and deteriorating economic fundamentals have weighed. Mexican stocks fell 1%, with data showing a 1.8% decline in industrial output in May from April and down 30.7% year-over-year. "May's release suggests that Mexico's economy has probably suffered one of the largest peak-to-trough falls in output in the emerging world," said Nikhil Sanghani, assistant economist at Capital Economics. "What's more, its (Mexico) recovery has been delayed and is likely to be weaker than in other emerging markets where the virus is under control." The peso was set to lag its peers for the week, albeit slightly. In Venezuela, the congress on Thursday said it hired two U.S. firms to manage $80 million seized from President Nicolas Maduro's government after Washington disavowed it and recognized opposition leader Juan Guaido as the country's legitimate president. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1069.83 -0.91 MSCI LatAm 1975.48 0.25 Brazil Bovespa 99929.88 0.78 Mexico IPC 36425.30 -1.01 Chile IPSA 4028.54 -0.09 Colombia COLCAP 1144.79 0.15 Currencies Latest Daily % change Brazil real 5.3258 0.30 Mexico peso 22.4710 0.69 Chile peso 792.4 -0.56 Colombia peso 3608.37 0.16 Peru sol 3.5017 -0.06 (Reporting by Shreyashi Sanyal in Bengaluru; Editing by Dan Grebler)

UK stocks recover from three-day drop, end lower for the week

10 Jul 2020

British stocks recovered from three straight sessions of losses on Friday, but still ended the week lower as a continued spike in global coronavirus cases undercut risk appetite.

EMERGING MARKETS-Latam FX falls amid rate-cut speculation, virus uncertainty

09 Jul 2020

* Mexican inflation rises more than expected in June * Mexican cenbank seen cutting rates by 100bps -Citi * Prominent creditor group rejects Argentine debt deal * Brazil cenbank studying 'residual' cut in Selic rate (Adds details, updates prices) By Susan Mathew and Ambar Warrick July 9 Latin American currencies retreated against the dollar on Thursday, while regional stocks fell in tandem with Wall Street as rising COVID-19 infections kept risk appetite fragile. Brazil's real fell about 0.3%. The country's central bank is studying recent data showing inflation is somewhat above expectations to see if there is room for a "residual" cut in interest rates, its president, Roberto Campos Neto, told Reuters in an interview late on Wednesday. Campos Neto said he expected the bank's growth projections to improve as pandemic emergency economic aid measures continued to spur improved growth. Still, borrowing rates in the country are at record lows, making the real less viable as an investment destination. Brazilian stocks fell about 0.5%. The MSCI's index of regional stocks shed nearly 1%, tracking a choppy session on Wall Street as investors weighed improving economic data against a rapid rise in coronavirus cases. The dollar gained on safe-haven flows. Worries remained that surging coronavirus cases may lead to tighter containment measures, which could delay the ongoing economic recovery. The global number of cases breached 12 million on Wednesday, while Brazil surpassed 1.7 million confirmed cases and 67,964 deaths. Latam markets have rebounded sharply from March lows, but surging cases, political issues, concerns over sovereign debt and deteriorating economic fundamentals have weighed. Chilean stocks led losses for the day with a 4.2% drop, while the peso snapped three straight sessions of gains. Mexico's peso was flat as the country's consumer price inflation accelerated more than expected in June but stayed within the central bank's target rate, official data showed. "Given the significant output contraction ... and inflation hovering around the mid-point of the central bank's target, we think Banxico will further cut (interest rates by) 100 basis points to a terminal rate of 4.0%," Citigroup strategists said in a note. They expect a cut of 50 basis points in August, followed by 25-basis-point cuts in September and November. Argentine markets were closed for a local holiday. A prominent group of funds had dismissed the government's "final" debt offer as only a good starting point on Wednesday, but analysts still believe a deal to restructure Argentina's $65 billion sovereign debt can be struck. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1079.04 0.83 MSCI LatAm 1957.81 -0.95 Brazil Bovespa 99268.21 -0.5 Mexico IPC 36844.22 -1.71 Chile IPSA 4009.86 -4.21 Colombia COLCAP 1138.65 -1.29 Currencies Latest Daily % change Brazil real 5.3585 -0.25 Mexico peso 22.6275 0.12 Chile peso 788.9 -0.32 Colombia peso 3621.57 0.29 Peru sol 3.4997 0.57 (Reporting by Susan Mathew in Bengaluru; Editing by Marguerita Choy and Leslie Adler)

UK stocks mark worst day in two weeks on energy losses, virus fears

09 Jul 2020

London's FTSE 100 was weighed down by energy stocks on Thursday as oil prices weakened and a rise in coronavirus cases in major global economies dented broader sentiment.

EMERGING MARKETS-Brazil's real leads FX gains on strong data

08 Jul 2020

* Chile's peso gains for third session * Brazil's real up after two days of declines * MSCI Latam stocks index rises (Adds comments, updates prices) By Ambar Warrick and Shreyashi Sanyal July 8 Brazil's real rose on Wednesday after better-than-expected economic data pointed to some recovery in Latin America's largest economy, while regional stocks also edged higher. The real added about 0.7% after data showed retail sales in the country grew 13.9% in May from the prior month, more than twice what was expected in a Reuters poll. The reading reflected a pickup in economic activity as the country steadily relaxed coronavirus-related lockdowns. Still, Brazil is the second-worst-stricken country in terms of the number of coronavirus infections, behind only the United States. "We expect retail sales activity to have reached bottom in April and to stage a gradual recovery in coming months in tandem with the relaxation of social distancing protocols and other measures to restrict movement and activity," Goldman Sachs analysts wrote in a note. "However, a still very complex domestic COVID viral picture could undermine/weaken the pace of the forecasted recovery." Brazilian President Jair Bolsonaro said on Tuesday he has tested positive for the virus, prompting some weakness in stocks and the real. On Wednesday, stocks were up about 1.8%. "Even though the real was able to appreciate most recently whenever general market sentiment lifted, a glance at the options markets illustrates (that) investors see increased risks in the real regardless of global developments," said Thu Lan Nguyen, FX and emerging markets analyst at Commerzbank. Chile's peso rose about 0.4%, extending gains into a third straight session on continued support from copper prices. Concerns over copper supply from the world's top producer of the metal have caused a large jump in prices. A perceived recovery in Chinese demand has also helped. The country, long hailed as one of Latin America's most stable economies, was struck by the pandemic just as it was recovering from months of unrest over inequality. Mexico's peso rose slightly versus the dollar. Petroleos Mexicanos, the country's debt-ridden oil and gas firm, said on Tuesday it will offer a swap for $22.4 billion worth of bonds maturing between 2027 and 2060 as it seeks to manage its massive debt load. Argentine over-the-counter bonds extended their rise since the government unveiled a sweetened debt restructuring offer on Sunday, which has raised hopes that the country could win creditors over to a deal. Ecuador also reached a deal with bondholders on Monday to renegotiate its debt to cut outstanding capital payments and extend maturities on the country's bonds. Key Latin American stock indexes and currencies at 1948 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1070.89 1.74 MSCI LatAm 1982.10 0.68 Brazil Bovespa 99894.48 2.18 Mexico IPC 37529.18 -0.81 Chile IPSA 4189.18 -1.61 Argentina MerVal 42695.02 0.465 Colombia COLCAP 1150.41 1.64 Currencies Latest Daily % change Brazil real 5.3500 0.65 Mexico peso 22.7210 0.53 Chile peso 785.8 0.41 Colombia peso 3632.04 -0.20 Peru sol 3.5198 0.48 Argentina peso (interbank) 70.9300 -0.07 Argentina peso (parallel) 123 3.25 (Reporting by Shreyashi Sanyal and Ambar Warrick in Bengaluru; editing by Jonathan Oatis and Sonya Hepinstall)

EMERGING MARKETS-Latam stocks edge up; Brazil's real leads FX gains on strong data

08 Jul 2020

* Chile's peso to gain for third session * Brazil's real up 0.9% * MSCI Latam stocks index up 1% By Ambar Warrick July 8 Brazil's real shot up on Wednesday after better-than-expected economic data pointed to some recovery in Latin America's largest economy, while regional stocks edged higher. The real added about 0.9% after data showed retail sales in the country grew 13.9% in May from the prior month, more than twice what was expected in a Reuters poll. The reading reflected a pickup in economic activity, as the country steadily relaxed coronavirus-related lockdowns. Still, Brazil is the second worst stricken country by the pandemic in terms of the number of infections, behind only the United States. "We expect retail sales activity to have reached bottom in April and to stage a gradual recovery in coming months in tandem with the relaxation of social distancing protocols and other measures to restrict movement and activity," Goldman Sachs analysts wrote in a note. "However, a still very complex domestic COVID viral picture could undermine/weaken the pace of the forecasted recovery." Brazilian President Jair Bolsonaro tested positive for the virus on Tuesday, prompting some weakness in stocks and the real. On Wednesday, stocks were up about 1.8%. Chile's peso rose about 0.7%, extending gains into a third straight session on continued support from copper prices. Concerns over copper supply from Chile, the world's top producer of the metal, have caused a large jump in prices. A perceived recovery in Chinese demand has also helped. The peso largely shrugged off a drop in June consumer price inflation, as the coronavirus weighed heavily on individual spending. The country, long hailed as one of Latin America´s most stable economies, was struck by the pandemic just as it was recovering from months of unrest over inequality. Chilean stocks were flat. Mexico's peso rose slightly versus the dollar. Petroleos Mexicanos, the country's debt-ridden oil and gas firm, said on Tuesday it will offer a swap for $22.4 billion worth of bonds maturing between 2027 and 2060 as it seeks to manage its massive debt load. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1067.11 1.38 MSCI LatAm 1987.37 0.95 Brazil Bovespa 99529.33 1.81 Mexico IPC 37978.11 0.37 Chile IPSA 4254.03 -0.09 Argentina MerVal - - Colombia COLCAP 1133.91 0.18 Currencies Latest Daily % change Brazil real 5.3357 0.92 Mexico peso 22.7140 0.56 Chile peso 783.4 0.71 Colombia peso 3618.78 0.16 Peru sol 3.5267 0.29 Argentina peso 70.9300 -0.07 (interbank) (Reporting by Ambar Warrick in Bengaluru; editing by Jonathan Oatis)

EMERGING MARKETS-EMEA currencies tick lower in risk-off trade; stocks edge up

08 Jul 2020

* South African rand recovers from worst day in nearly 3 weeks

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

07 Jul 2020

* 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 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 demand. Chile's peso was propped up by data showing increased copper exports in June, while total exports also rose from last year. 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 (interbank) (Reporting by Ambar Warrick in Bengaluru; Editing by Sandra Maler)

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