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Sruthi Shankar

European shares rise amid Brexit tussle as focus shifts to earnings

21 Oct 2019

European shares broke a three-day run of losses on Monday, as investors stuck to hopes that Britain will avoid a disorderly exit from the European Union, while positive corporate updates and comments on U.S.-China trade talks added to the upbeat mood.

EMERGING MARKETS-Brazil's real eyes biggest gain in six weeks as dollar wilts

18 Oct 2019

(Updates market price, adds details) By Sruthi Shankar Oct 18 The Brazilian real was on track to post its biggest percentage gain in six weeks on Monday as the dollar came under pressure ahead of a crucial parliamentary vote on Brexit, while Latin American stocks followed Wall Street lower. The real jumped 1.2% to 4.19 per dollar, reversing much of this week's losses made on expectations of deeper interest rate cuts after a clutch of weak data. The currency was trading close to its 50-day moving average, which, if broken, could signal more gains for the real. "We note that USDBRL flirted with the 4.19 level, but was once again unable to break 4.20, emphasizing the strong resistance at this level," Morgan Stanley analysts wrote in a note. "We have started to see some other green shoots in the economy and the recent trade developments signal a potential improvement in the global environment." Aiding positive moves in Latin American currencies, the dollar declined against a basket of major currencies as the euro found favor after Britain and the European Union clinched a deal on Thursday for an orderly British exit from the bloc. However, doubts prevail about the proposed deal getting through the British parliament in Saturday's vote. Mexico's peso hit a new 11-week high to resume its winning run for a seventh session in eight, with hopes of ratification of a trade deal between the United States, Canada and Mexico also playing into the mood. Chile's peso hit its highest level in a month, while the Colombian peso rose despite weaker oil prices. The Argentine peso was little changed. Recent opinion polls showed Peronist opposition candidate Alberto Fernandez should beat business-friendly incumbent Mauricio Macri in the Oct. 27 presidential election by enough to clinch a first-round win. Regional stocks tracked Wall Street's lackluster moves as sentiment was dented by data showing the Chinese economy expanded at its weakest pace in almost 30 years, reinforcing global growth slowdown fears and reiterating the need for a U.S.-China trade deal. Brazil's Bovespa fell 0.2%. State-controlled lender Banco do Brasil SA jumped 3.5% after the bank said it had raised 5.836 billion reais ($1.39 billion) in a secondary share offering. Those were offset by losses by miner Vale and other steelmakers due to weakness in Dalian iron ore prices. Shares of Petroleo Brasileiro rose 0.2% after the state oil firm posted a significant production boost in the third quarter. In Mexico, conglomerate Alfa was among the worst performers on the IPC index after it reported double-digit drops in revenue and net profit for the third quarter. State-run oil company Pemex on Thursday released details of how it will calculate its formula to hedge against upcoming sales of Maya crude, its flagship grade. Pemex sets formulas that dictate the price at which Mexico's crude is sold worldwide. Key Latin American stock indexes and currencies at 1936 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1025.46 -0.28 MSCI LatAm 2716.69 -0.13 Brazil Bovespa 104807.74 -0.2 Mexico IPC 43197.99 -0.65 Chile IPSA 5192.39 0.39 Argentina MerVal 31888.45 -0.333 Colombia IGBC 12804.58 -0.39 Currencies Latest Daily % change Brazil real 4.1160 1.29 Mexico peso 19.1315 0.32 Chile peso 709 0.34 Colombia peso 3424.5 0.70 Peru sol 3.336 0.39 Argentina peso (interbank) 58.3460 -0.04 (Reporting by Sruthi Shankar in Bengaluru; Editing by Daniel Wallis)

String of weak earnings leave European stocks barely up on the week

18 Oct 2019

Gloomy earnings reports from French carmaker Renault and food group Danone drove European shares lower on Friday, rounding off a tumultuous week that left investors waiting anxiously for the next twist in the Brexit saga.

EMERGING MARKETS-Dollar doldrums lift Latin American currencies

17 Oct 2019

(Updates market prices) By Susan Mathew and Sruthi Shankar Oct 17 Most Latin American currencies were supported by a weak dollar on Thursday after the British government and the European Union agreed on a long-awaited Brexit deal, although Brazil's Bovespa stock index broke a six-day winning streak. The dollar fell sharply against the euro on the Brexit deal, spurring gains in most emerging market currencies even as Prime Minister Boris Johnson still faces a knife-edge vote in parliament on Saturday to get it approved. The Colombian peso and the Chilean peso gained 0.2% and 0.7%, respectively, while the Mexican peso held steady after a six-day run of gains. Mexico's President Andres Manuel Lopez Obrador vowed to increase wages and funding for the implementation of labor reforms, part of a campaign to convince U.S. Democratic lawmakers to ratify a new North American trade deal. The Colombian peso recovered from early lows following news Congress approved a 2020 government budget of 271.7 trillion pesos ($78.7 billion) on Wednesday, hours after the top court rolled back a tax reform proposal. The government now has to pass a new law. Morgan Stanley analysts had warned risk premia would increase in Colombian assets if the law was overturned. "With low approval ratings and limited time, the next few weeks should be challenging for the current administration and volatility in local assets will likely increase." "Additionally, local elections on October 27 are likely to add further noise to any potential upcoming Congressional debates around the law, suggesting further downside risks around the new approval process," Morgan Stanley said. The Brazilian real dipped 0.4%, continuing its slide from earlier this week after weak inflation data prompted bets of more interest rate cuts by the central bank. Brazilian stocks also edged lower, dragged down by shares in banks and oil firm Petrobras. Key Latin American stock indexes and currencies at 1951 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1028.69 0.45 MSCI LatAm 2704.90 -0.15 Brazil Bovespa 104969.47 -0.43 Mexico IPC 43421.82 -0.27 Chile IPSA 5172.31 0.43 Argentina MerVal 31833.20 3.492 Colombia IGBC 12872.70 0.17 Currencies Latest Daily % change Brazil real 4.1680 -0.35 Mexico peso 19.1990 0.01 Chile peso 711.25 0.71 Colombia peso 3448.5 0.23 Peru sol 3.349 0.39 Argentina peso (interbank) 58.3150 0.06 (Reporting by Susan Mathew and Sruthi Shankar in Bengaluru; Editing by Chizu Nomiyama)

Tempered Brexit hopes drag European stocks into red

17 Oct 2019

European shares edged lower on Thursday, as strong earnings from Sweden's Ericsson were offset by fading optimism over the Brexit deal amid investor worries about its support in the British parliament.

EMERGING MARKETS-Latam markets aided by soft dollar, Argentine peso down on inflation data

16 Oct 2019

(Updates market prices) By Sruthi Shankar Oct 16 The Brazilian real bounced off two-week lows on Thursday and the Mexican peso rose against the dollar on weak U.S. data, but Latin American markets were range-bound with fresh strains in U.S.-China trade talks. The real rose 0.6% after a recent run of losses fueled by sluggish data in the region's largest economy. The Mexican peso hit a fresh two-month high as the dollar fell after U.S. retail sales data painted a gloomy economic picture and supported the case for further interest rate cuts by the Federal Reserve. Other currencies such as the Colombian and Chilean pesos weakened on concerns about trade disputes and global growth. The U.S. House of Representatives on Tuesday passed four pieces of legislation taking a hard line on China, with three related to pro-democracy protests in Hong Kong. The measures came as Washington engaged in delicate talks with Beijing over their bruising trade war. U.S. President Donald Trump on Wednesday said he likely would not sign any trade deal with China until he meets with Chinese President Xi Jinping at the upcoming APEC Forum in Chile. "News flow on trade and events remains a source of choppiness in a market where the macro backdrop is weak, but policy backstop continues to keep asset valuations at elevated levels," Oxford Economics analysts wrote in a note. "Even in the absence of a major sell-off, the underlying performance variation shows low confidence in growth." The Argentine peso fell over 2% after data showed consumer prices rose 5.9% in September, its sharpest jump in a year, amid a flaring economic crisis in Latin America's No. 3 economy. However, stock markets in the region broadly rose, with Brazil's Bovespa jumping 0.8%. Shares in state-run power firm Eletrobras gained 5% after it said that laying off third-party employees at its unit Furnas Centrais Eletricas will generate cost savings of about 280 million reais per year. Shares of Vale fell 2.5% as Dalian iron ore futures slumped after China's top steelmaking city of Tangshan issued a second-level smog alert that requires mills to further limit operations. Mexico's IPC index advanced, led by a 3.3% rise in shares of America Movil after the country's largest telecom provider said it was open to discussing a deal with Oi SA, amid speculation that the Brazilian telecom carrier is in talks to sell its assets. The Colombian peso slipped 0.2%, while its main stock index was flat. Analysts awaited a ruling this week by Colombia's constitutional court on the legality of a financing law that was approved late year. "While our base case does not incorporate a dissolution of the law, such a measure would be a net negative for local assets, in our view," Morgan Stanley analysts said. Key Latin American stock indexes and currencies at 1953 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1024.99 0.56 MSCI LatAm 2715.68 0.54 Brazil Bovespa 105376.36 0.85 Mexico IPC 43467.47 0.52 Chile IPSA 5150.11 -0.14 Argentina MerVal 30857.66 -1.519 Colombia IGBC 12867.39 0.07 Currencies Latest Daily % change Brazil real 4.1535 0.64 Mexico peso 19.2092 0.16 Chile peso 716.55 -0.22 Colombia peso 3456.5 -0.19 Peru sol 3.362 0.12 Argentina peso 56.00 -2.33 (Reporting by Sruthi Shankar and Susan Mathew in Bengaluru; Editing by Richard Chang)

European shares pause as Brexit deal reports swirl

16 Oct 2019

European stocks pulled back slightly on Wednesday from their strongest closing high in more than a year as clashing headlines on Britain's last-minute efforts to forge a divorce deal with the European Union left investors hanging on the outcome.

EMERGING MARKETS-Brazilian real touches 2-week low as trade doubts remain

15 Oct 2019

(Updates with market price) By Sruthi Shankar Oct 15 Brazil's real touched a near two-week low against the dollar on Tuesday and most Latin American currencies weakened as doubts prevailed over a partial U.S.-China trade agreement, while the IMF lowered its economic growth outlook for Latin America. The real fell 0.9% in its third straight session of declines, leading losses among the regional currencies, while the Colombian and the Chilean pesos dropped 0.7% and 0.4%, respectively. Investors were unsettled about the recent trade negotiations between Washington and Beijing officials as China indicated that further talks were needed and a top U.S. official said additional tariffs will be imposed in December if a deal has not been reached by then. "Sentiment continues to deteriorate amid trade war concerns," strategists at Bank of America Merrill Lynch wrote in a note. "In the long run, investors are positive on Brazil. Still, catalysts look priced in, as most expect further Selic cuts and tax reform approval in 2020." A recent string of weak data out of Brazil had raised concerns about its economic recovery and added to bets that the central bank will bring down interest rates further. Adding to woes, the International Monetary Fund lowered its economic growth estimates for Latin America, citing U.S.-China trade war and other local factors. Mexico's peso traded slightly higher, on track for its fifth session of gains. Mexico's federal government is trying to counter an economic slowdown with targeted infrastructure spending, Finance Minister Arturo Herrera said, adding that a tax reform could be expected in the second half of President Andres Manuel Lopez Obrador's term. Analysts at Citigroup say the Mexican and Chilean pesos have benefited from hedge fund buying over the last few weeks. They added that a study of leveraged flows shows the Mexican currency is the most attractive Latam currency. Stocks in the region were steady. In Brazil, a 1% rise in shares of state-owned oil firm Petrobras was countered by a 5.2% loss in power firm Equatorial Energia SA after a regulator denied requests to raise tariffs in certain states. Key Latin American stock indexes and currencies at 2004 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1019.07 0.16 MSCI LatAm 2691.64 -0.5 Brazil Bovespa 104510.68 0.2 Mexico IPC 43262.23 -0.09 Chile IPSA 5157.50 0.51 Argentina MerVal 31344.75 -1.426 Colombia IGBC 12904.25 -0.34 Currencies Latest Daily % change Brazil real 4.1653 -0.94 Mexico peso 19.2520 0.08 Chile peso 715.05 -0.40 Colombia peso 3450 -0.70 Peru sol 3.366 0.03 Argentina peso (interbank) 58.2700 -0.38 (Reporting by Sruthi Shankar and Susan Mathew in Bengaluru; Editing by Cynthia Osterman)

European shares jump as hopes of Brexit deal grow

15 Oct 2019

European stocks rose to their highest in nearly three months on Tuesday, with Irish stocks soaring almost 3%, after a news report said negotiators were on the verge of a deal that would avoid Britain crashing out of the European Union.

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