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Sruthi Shankar

EMERGING MARKETS-Latam FX slammed by strong dollar, Brazil's real hits new low

20 Feb 2020

* Brazil posts lowest monthly February inflation since 1994 * Coronavirus buoys safe-have demand for U.S. dollar * Argentine bonds fall after IMF nod for restructuring (Updates prices, adds comment) By Sruthi Shankar and Shreyashi Sanyal Feb 20 Latin American currencies took a beating on Thursday, as investors feared a bigger hit to global growth from the coronavirus outbreak after cases outside of China rose. The Brazil's real hit a new low amid improving safe-haven appeal for the dollar as data pointed to strength in the U.S. economy, while the Mexican and the Chilean pesos fell more than 1.3%. The number of new infections rose in South Korea, while Japan reported two new deaths and new research suggested the pathogen was more contagious than previously thought, adding to the alarm. The dollar was perched at a 10-month high against the Japanese yen after rising nearly 2% since Tuesday, while also upping pressure on Latin American currencies. Brazil's real weakened 0.6% to 4.3905 against the greenback, touching a fresh record low. Data showed Brazilian inflation slowed in February to its lowest in over a quarter of a century. The central bank of Latin America's biggest economy said it would lower banks' reserve requirements on time deposits to 25% from 31%, starting on March 16, in a move that will free up an estimated 49 billion reais ($11.2 billion) of liquidity. "Overall, it seems like there is a sense of necessity for central banks to look towards easing. Since the numbers have not been upbeat in Brazil, it only looks poorly for the currency," said Juan Perez, senior foreign exchange trader and strategist, Tempus Inc. "The real, however, has potential to recover dramatically once this coronavirus situation is overcome." A basket of currencies in the region weakened by 0.6%, while MSCI's index for Latin American equities fell 1.6%. Brazilian shares also dropped 1.6%, with conglomerate Ultrapar Participações SA leading declines after a one-time charge in its drugstore chain Extrafarma hit quarterly earnings. Meanwhile, airline Gol, Boeing Co's largest Latin America customer, fell 5% after reporting a quarterly profit that almost halved as its MAX fleet remained grounded after two deadly crashes. State-run oil firm Petroleo Brasileiro SA slid 1.8% after executives said its oil exports should fall slightly in the first quarter and production is already taking a hit, due to scheduled maintenance stoppages. Argentine bond prices fell 1.3% after the International Monetary Fund essentially gave the government a green light to restructure its bonds. The question is how much of a haircut private creditors will be asked to take in the upcoming bond revamp. Economy Minister Martin Guzman has said he wants to avoid a rancorous restructuring but vows to neither make unsustainable debt payments nor impose fiscal austerity. Key Latin American stock indexes and currencies at 2011 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1093.47 -0.93 MSCI LatAm 2733.19 -1.56 Brazil Bovespa 114665.68 -1.59 Mexico IPC 44855.76 -0.1 Chile IPSA 4536.05 0.37 Argentina MerVal 39018.02 1.634 Colombia COLCAP 1674.38 -0.11 Currencies Latest Daily % change Brazil real 4.3905 -0.62 Mexico peso 18.8225 -1.40 Chile peso 806.88 -1.36 Colombia peso 3401.4 -0.56 Peru sol 3.391 -0.29 Argentina peso (interbank) 61.7875 -0.09 (Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru; editing by Nick Macfie and Bernadette Baum)

EMERGING MARKETS-Bovepsa gains on strong earnings, ebbing coronvarius concerns

19 Feb 2020

* Real down despite central bank guidance on intervention * Strong U.S. data boosts dollar; Fed view of rates unchanged * Electric motor maker WEG SA jumps after results (Updates prices) By Sruthi Shankar Feb 19 A batch of strong company results and a decline in the number of new coronavirus cases in China lifted Brazilian shares on Wednesday, although the real weakened for a third session. With Wall Street indexes hitting new record highs, an index of Latin American equities rose 0.6% as the tally of newly reported cases in China fell for a second day to the lowest since January. The Bovespa gained 1.2%, with WEG SA, Latin America's largest maker of electric motors, leading gains after reporting better-than-expected quarterly earnings. Planemaker Embraer rose 2% after the value of its future firm orders rose modestly to $16.8 billion in the fourth quarter, while meatpacker JBS gained 3.8% after saying it has agreed to acquire production facilities from Empire Packing Co, as well as the Ledbetter brand for $238 million. However, the real was down 0.2% at 4.3640 per dollar, hovering near an all-time low even as Brazil's central bank president, Roberto Campos Neto, said on Tuesday the bank stands ready to intervene again to address illiquidity, excessive market moves or currency weakness. But he also stressed that the real has a free-floating exchange rate. With interest rates at a record low, the real fell to an all-time low of 4.38 per dollar last week, prompting the central bank to intervene in the foreign exchange swaps market. "I think the central bank is in a tricky situation where perceived higher power to intervene has dropped and at the same time cutting rates reduces the power they may have," said Koon Chow, an emerging markets macro and FX strategist at UBP. "Generally low rates are hurting the real. They (central bank) pushed it more aggressively than anyone else." Economists have cut 2020 growth expectations for Brazil following a string of weak data amid worries the coronavirus outbreak will dent growth in China - the South American country's largest trading partner. The Colombian peso gained half a percent as oil prices jumped on easing concerns about the coronavirus outbreak and a U.S. move to take more Venezuelan crude out of the market. Other currencies in the region were subdued, with the dollar gaining momentum after strong U.S. data. Minutes from the U.S. Federal Reserve's last policy meeting showed policymakers were cautiously optimistic about their ability to hold interest rates steady this year even as they acknowledged new risks due to the coronavirus outbreak. Meanwhile, investors are awaiting word from the International Monetary Fund about the sustainability of Argentina's debt and whether official meetings would result in a recommendation for a steep debt restructuring. Argentine bond prices have stumbled 3.5% lower so far this year as uncertainty rises about the country's ability to pay $44 billion to the IMF and tens of billions of dollar more to private bondholders. Key Latin American stock indexes and currencies at 2001 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1103.33 0.7 MSCI LatAm 2778.84 0.57 Brazil Bovespa 116364.70 1.21 Mexico IPC 44854.17 -0.27 Chile IPSA 4519.19 -0.54 Argentina MerVal 38423.36 0.698 Colombia COLCAP 1669.97 0.28 Currencies Latest Daily % change Brazil real 4.3651 -0.22 Mexico peso 18.5545 0.18 Chile peso 798.8 -0.24 Colombia peso 3382.5 0.56 Peru sol 3.381 0.03 Argentina peso (interbank) 61.7250 -0.10 (Reporting by Sruthi Shankar in Bengaluru; editing by Jonathan Oatis)

EMERGING MARKETS-Brazil shares gain on strong earnings, real slides again

19 Feb 2020

* Real down despite central bank guidance on intervention * Other Latam currencies mixed By Sruthi Shankar Feb 19 A batch of strong results and a decline in the number of new coronavirus cases in China lifted the Brazilian shares on Wednesday, although the real slid for a third session. Brazil's real was down 0.4% at 4.3746 per dollar, hovering near an all-time low even as Brazil's central bank president, Roberto Campos Neto, said on Tuesday the bank stands ready to intervene again to address illiquidity, excessive market moves or currency weakness. But he also stressed the real has a free-floating exchange rate. With interest rates at a record low, the real fell to an all time low of 4.38 per dollar last week, prompting the central bank's intervention in the foreign exchange swaps market. "I think the central bank is in a tricky situation where perceived higher power to intervene has dropped and at the same time, cutting rates reduces the power they may have," said Koon Chow, an EM macro and FX strategist at UBP. "Generally low rates are hurting the real. They (central bank) pushed it more aggressively than anyone else." Economists have cut 2020 growth expectations for the country following a string of weak data amid worries the coronavirus outbreak will dent growth in China - Brazil's largest trading partner. Other currencies in the region were subdued, but stock markets were generally higher as the tally of newly reported cases in China fell for a second day to the lowest since January. The Bovespa gained 0.9%, with WEG SA, Latin America's largest maker of electric motors, leading gains after reporting better-than-expected quarterly earnings. Shares in IRB Brasil rose 4.4% after the reinsurer posted a 70% jump in fourth-quarter net profit, while meatpacker JBS gained 2.5% after saying it has agreed to acquire production facilities from Empire Packing Company, as well as the Ledbetter brand for $238 million. Investors are awaiting word from the International Monetary Fund about the sustainability of Argentina's debt and whether official meetings would yield a recommendation of a steep debt restructuring. Argentine bond prices have stumbled 3.5% lower so far this year as uncertainty rises about the ability of the country to pay $44 billion to the IMF and tens of billions of dollar more to private bondholders. Key Latin American stock indexes and currencies at 1501 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1103.33 0.7 MSCI LatAm 2773.83 0.39 Brazil Bovespa 116031.01 0.92 Mexico IPC 45126.58 0.34 Chile IPSA 4557.19 0.3 Argentina MerVal 38295.76 0.364 Colombia COLCAP 1674.46 0.55 Currencies Latest Daily % change Brazil real 4.3746 -0.40 Mexico peso 18.6055 -0.10 Chile peso 797 -0.01 Colombia peso 3405.56 -0.12 Peru sol 3.3818 0.01 Argentina peso (interbank) 61.7100 -0.08 (Reporting by Sruthi Shankar in Bengaluru)

EMERGING MARKETS-Latam equities at one-week low as Apple warning sours risk appetite

18 Feb 2020

* Apple warns of revenue shortfall due to coronavirus * Latam stocks index hits 1-week low * Citi cuts growth forecast for Brazil (Updates prices, adds analysts' comment) By Sruthi Shankar Feb 18 Latin American currencies and stocks came under pressure on Tuesday as Apple Inc's sales warning underscored fears about economic damage from the coronavirus outbreak. MSCI's index of Latin American equities fell 1% to its lowest level in one week, with stocks markets in Brazil, Chile and Argentina falling between 0.5% and 2.6%. The world's most valuable technology company said it will miss its March quarter sales guidance as the fast-spreading outbreak in China disrupted supply chains. The warning sent jitters through global financial markets which were off to an upbeat start to the week after China's stimulus efforts on Monday. "We all know Apple's supply chain is very heavily dependent on China. It's not surprising that this is coming out," said Jim Besaw, chief investment officer at GenTrust. "What's probably more relevant is what everyone thinks is going to be the evolution of the epidemic over the next several weeks which seems to be a bit of a wild card." A Bank of America Merrill Lynch survey showed slowing economic growth and commodities demand in China as the biggest worries among Latin American fund managers by far. Demand for safer assets boosted the dollar, weakening Brazil's real for the second session as Citigroup cut its economic growth and inflation forecasts for the country. It cited fallout from the coronavirus in China, which is Brazil's largest trading partner. Argentine bonds drifted 1% lower on the penultimate day of meetings in Buenos Aires with the International Monetary Fund, with policymakers rushing to hammer out a revamp of $44 billion in loans. The IMF mission ends on Wednesday, with a statement that Argentina hopes will not only announce a postponement of loan repayments to the fund but support for its upcoming restructuring of bonds. Key Latin American stock indexes and currencies at 2015 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1095.05 -1.17 MSCI LatAm 2757.64 -1.12 Brazil Bovespa 114688.17 -0.54 Mexico IPC 44983.49 -0.07 Chile IPSA 4543.62 -1.89 Argentina MerVal 38158.11 -2.659 Colombia COLCAP 1663.79 -0.1 Currencies Latest Daily % change Brazil real 4.3576 -0.71 Mexico peso 18.5876 -0.21 Chile peso 796.9 -0.48 Colombia peso 3401.4 -0.18 Peru sol 3.382 -0.12 Argentina peso (interbank) 61.6600 -0.10 (Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru; Editing by Tom Brown)

China measures, Italian banks lift European shares to record close

17 Feb 2020

European shares hit a record high close on Monday as a rally in Italian banks and fresh attempts by China to limit the economic impact of the coronavirus outbreak lifted investor spirits.

EMERGING MARKETS-Corporate updates, China measures help Brazil outperform Latam stocks

17 Feb 2020

* Barclays latest bank to lower Brazil GDP forecasts * China cuts medium-term rate to ease coronavirus hit * Vale boosted by strong iron ore prices (Updates prices, adds analyst's comment) By Sruthi Shankar Feb 17 Stocks in Latin America edged higher on Monday, led by Brazil's Bovepsa, following positive corporate updates, while investor anxiety around the impact of a coronavirus outbreak was soothed by China's stimulus measures. China's central bank cut its medium-term lending rate on Monday, ramping up support for the economy and companies that have been hit by a slump in sales and activity because of the coronavirus outbreak. The cut helped Chinese stock markets rise while lifting sentiment globally. MSCI's index for Latin American equities rose 0.2%. Markets in the region have taken a hit from the outbreak in China, which is one of the region's top export destinations. Sao Paulo-listed shares gained 0.9%, with Carrefour Brasil SA rising more than 3% after the retailer agreed to buy 30 stores from smaller rival Makro. Higher iron ore prices helped miner Vale SA gain 4%, while retailer Magazine Luiza SA was up 5% after reporting a jump in net sales and EBITDA in the fourth quarter. Trading was subdued with U.S. markets closed for a public holiday, leaving Latin American currencies mixed. Brazil's real fell against the dollar, with Barclays becoming the latest bank to cut growth forecasts because of the spillover from disappointing data late last year that meant growth this year will now be barely above 2%. U.S. futures markets data showed international speculators increased their bearish bets on the real to a six-week high last week before the central bank intervened in the market to lift the currency from its record low. Citigroup expects the real to strengthen, however, adding that "leveraged buying is a positive sign for a currency and Friday's flows raise the likelihood that the intervention will be successful." Investors also awaited the conclusion of debt talks between the cash-strapped Argentine government and its biggest creditor, the International Monetary Fund, that were expected to set the tone for a massive bond restructuring ahead. Key Latin American stock indexes and currencies at 2011 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1107.93 0.15 MSCI LatAm 2789.39 0.19 Brazil Bovespa 115374.96 0.87 Mexico IPC 44978.74 -0.05 Chile IPSA 4631.33 -0.53 Argentina MerVal 39189.33 1.402 Colombia COLCAP 1663.07 -0.08 Currencies Latest Daily % change Brazil real 4.3257 -0.67 Mexico peso 18.5555 -0.12 Chile peso 793.1 -0.29 Colombia peso 3395.22 -0.20 Peru sol 3.378 0.00 Argentina peso (interbank) 61.5000 -0.07 (Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru; Editing by Sonya Hepinstall and Peter Cooney)

EMERGING MARKETS-Brazil's real rebounds from record low; virus scare keeps stocks on edge

14 Feb 2020

* Real firms over 1% as central bank sells dollars * Brazilian equities fall on caution around coronavirus * Other Latam currencies mixed (New throughout, updates prices, market activity and comments to close) By Sruthi Shankar and Sagarika Jaisinghani Feb 14 Brazil's real rose on Friday and recorded its first weekly gain in seven, supported by the central bank's move to stem a selloff in the currency, while other Latin American assets came under pressure from concerns around the coronavirus epidemic. The real firmed 1.26%, its biggest daily gain in two months, a day after as the central bank sold $1 billion in foreign exchange swaps in its first market intervention in almost three months. Data showed economic activity in Brazil fell more than expected in December, tying in with other indicators that pointed to a slowdown in Latin America's largest economy at the end of last year. The real, which was also battered in 2019 by failed oil auctions, has already lost more than 6% this year and is among the worst performing regional currencies against the dollar. "In the short-term, it (the intervention) can certainly help the BRL, but it's hard to see a sustainable rally from the intervention alone," said Gordon Bowers, emerging markets fixed income analyst at Columbia Threadneedle. "For the currency to outperform, we need growth data to pick up." The epidemic has prompted economists to cut growth forecasts for China's GDP in the first quarter and sparked a flight from assets in Brazil, among the main iron ore exporters to China. Brazilian equities fell 1.1% on Friday, sliding for the second straight session. Health authorities reported about 5,000 new cases of the deadly virus on Friday, dashing earlier hopes that the outbreak was peaking. But global stock markets inched higher as policymakers pledged more monetary stimulus to limit its economic fallout. The Mexican peso added about 0.2%, a day after Mexico's central bank cut its benchmark interest rate for a fifth consecutive time in the wake of a stagnating economy and slightly above-target headline inflation. Colombia's peso slid 0.5%, while the Chilean peso edged higher. Key Latin American stock indexes and currencies at 2113 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1105.94 -0.01 MSCI LatAm 2789.91 -0.13 Brazil Bovespa 114378.62 -1.11 Mexico IPC 44993.62 -0.03 Chile IPSA 4655.86 -0.08 Argentina MerVal 38647.68 -0.056 Colombia COLCAP 1664.40 0.08 Currencies Latest Daily % change Brazil real 4.2934 1.31 Mexico peso 18.5468 0.23 Chile peso 790.8 0.57 Colombia peso 3390.61 -0.49 Peru sol 3.378 0.18 Argentina peso (interbank) 61.4575 -0.11 (Reporting by Sruthi Shankar and Sagarika Jaisinghani in Bengaluru; Editing by David Gregorio)

European shares settle below record highs

14 Feb 2020

A handful of negative company updates from Britain and France knocked European shares off record highs hit earlier in the session on Friday, while investors grappled with the impact of the coronavirus outbreak on global growth.

EMERGING MARKETS-Brazil's real hits fresh low, lags steady Latam markets

12 Feb 2020

* Real under pressure from weak retail sales data * Bovepsa lifted by batch of earnings updates * IMF set to begin debt talks with Argentina (Updates prices) By Sruthi Shankar Feb 12 The Brazilian real slid to a fresh record low on Wednesday after data showed the country's retail sales dropped unexpectedly in December, while broader Latin American markets gained on hopes the coronavirus outbreak in China has peaked. The real fell as much as 0.5% to 4.3526, making it one of the worst-performing currencies in the world against the dollar this year, down almost 8%. The Brazilian currency has been pressured by slow overseas demand for Brazilian assets with interest rates at a record low. Data showed Brazilian retail sales fell 0.1% in December, the first decline in eight months and another sign that consumer spending in Latin America's No. 1 economy will not power growth. "We think there is more weakness to come especially considering that the BCB has so far made no hints that it stands ready to intervene," analysts at Oxford Economics wrote in a client note, referring to Brazil's central bank. They added that there is still room to go before the real crosses into oversold territory. Other currencies in the region recovered as China reported its lowest number of new coronavirus cases since late January, supporting its senior medical adviser's prediction that the outbreak might end by April. The Colombian peso rose 1%, aided by a jump in crude prices. The Mexican peso was up 0.2% ahead of a central bank meeting on Thursday when it is expected to cut its key interest rate by 25 basis points to 7%. In equity markets, Sao Paulo-listed shares jumped 1.5%, with education company Cogna Educação SA leading gains after it raised 2.5 billion reais ($577 million) in a share offering. Wireless carrier TIM Participações SA rose 4% after it posted better-than-expected quarterly income, helped by higher customer spending. The International Monetary Fund was set to start talks with Argentina about economic policy, with the local bond market muddled after a failed debt auction and unilateral reprofiling of principal payments this week. On Tuesday, Argentina decided to postpone a $1.47 billion principal payment on its AF20 bond until Sept. 30, after two attempts to roll over the bond attracted low investor participation. The government says it needs to rejig $100 billion in debt, including $44 billion in loans to the fund, Argentina's biggest single creditor. Key Latin American stock indexes and currencies at 1946 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1110.01 0.96 MSCI LatAm 2818.15 1.04 Brazil Bovespa 117152.35 1.54 Mexico IPC 45453.24 0.95 Chile IPSA 4667.90 0.16 Argentina MerVal 40067.84 0.611 Colombia COLCAP 1659.88 0.89 Currencies Latest Daily % change Brazil real 4.3508 -0.42 Mexico peso 18.6200 0.18 Chile peso 790 0.19 Colombia peso 3386 0.96 Peru sol 3.378 0.27 Argentina peso (interbank) 61.2275 -0.18 (Reporting by Sruthi Shankar in Bengaluru; Editing by David Gregorio and Paul Simao)

EMERGING MARKETS-Brazil's real lags steady Latam markets as data disappoints

12 Feb 2020

* Real under pressure from weak retail sales data * Bovepsa lifted by another batch of earnings updates * IMF set to begin debt talks with Argentina By Sruthi Shankar Feb 12 The Brazilian real was about flat on Wednesday after sliding in early trade to a record low on Wednesday after data showed retail sales dropped unexpectedly in December, and broader Latin American markets gained on hopes that the coronavirus outbreak in China has peaked. The real fell as much as 0.24% to 4.3419 before trading little changed versus the dollar. The currency has been pressured this year by slow overseas demand for Brazilian assets with interest rates at a record low. Official figures showed retail sales fell 0.1% in December, the first decline in eight months and another sign that consumer spending in Latin America's No. 1 economy will not power growth. "The release extends the slew of disappointing data undermining the growth narrative in Brazil and BRL longs," Citigroup's Dirk Willer wrote in a client note. "We stay on the sidelines in the BRL until more positive data firmly closes to door to further easing." Other currencies in the region, however, recovered further as China reported its lowest number of new coronavirus cases since late January, supporting its senior medical adviser's prediction that the outbreak might end by April. Currencies of Mexico, Chile and Colombia gained between 0.2% and 0.8%. Sao Paulo-listed shares added 0.5%, with payments processor Cielo SA leading gains after Chief Executive Officer Paulo Caffarelli said the company will seek to reverse a fall in profits this year. Wireless carrier TIM Participações SA rose 3.8% after it posted better-than-expected quarterly income, helped by higher customer spending. The International Monetary Fund was set to start talks with Argentina about economic policy, with the local bond market muddled after a failed debt auction and unilateral reprofiling of principal payments this week. On Tuesday, Argentina decided to postpone a $1.47 billion principal payment on its AF20 bond until Sept. 30, after two attempts to roll over the bond attracted low investor participation. The government says it needs to rejig $100 billion in debt, including $44 billion in loans to the fund, Argentina's biggest single creditor. Key Latin American stock indexes and currencies at 1409 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1106.37 0.63 MSCI LatAm 2795.96 0.24 Brazil Bovespa 115906.98 0.46 Mexico IPC - - Chile IPSA 4684.04 0.51 Argentina MerVal - - Colombia COLCAP - - Currencies Latest Daily % change Brazil real 4.3325 -0.16 Mexico peso 18.6280 0.14 Chile peso 787.4 0.52 Colombia peso 3392.51 0.76 Peru sol 3.3818 0.15 Argentina peso (interbank) 61.2150 -0.16 (Reporting by Sruthi Shankar in Bengaluru; Editing by David Gregorio)

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