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Susan Mathew

EMERGING MARKETS-Latam stocks rally as U.S.-China strike initial trade deal

13 Dec 2019

(Adds trade details, updates prices) By Susan Mathew Dec 13 Latin American markets rose on Friday as investors welcomed a limited U.S.-China trade deal, and as U.S. President Donald Trump said Washington would suspend tariffs on Chinese imports scheduled to take effect on Sunday. China and the United States have agreed on the text of a "phase one" trade deal, Beijing said on Friday, agreeing also to step up purchases of U.S. agricultural products in a major step forward in resolving a trade war that has hit global supply chains and roiled markets for over 16 months. Mexican shares jumped 2.5% to a month high, and Chile stocks rose to their highest since late November. An index of Latam shares rose 0.8%. Caution prevailed, however, as the deal is yet to be signed. White House adviser Larry Kudlow warned that if China does not comply with the trade deal, action will be taken, including the possible imposition of tariffs. "Although it seems agreement has been reached about the content of the deal, the legal text is still to be drafted, which could create problems," wrote Timme Spakman, economist, international trade analysis at ING, in a note. "This phase one deal does not include the most sensitive topics, so considerable hurdles remain for a full deal that resolves the trade war." Investors also bought risk assets after British Prime Minister Boris Johnson's ruling Conservative Party won a solid majority, boosting confidence London would accomplish an orderly exit from the European Union. Brazil stocks edged up to scale new highs, driven by consumer and commodity-linked stocks. Oil and gas heavyweight Petroleo Brasileiro SA , however, fell after the Brazilian state development bank said it was considering selling up to all of the ordinary shares it holds in the state-run oil company via a secondary offering. Regional assets were set to gain for the week when support also stemmed from dovish indications from the U.S. Federal Reserve. Against a weaker dollar, Brazil's real fell 0.4% after two days of gains, while Colombia's peso slipped 0.5% to break a seven session winning streak. The Mexican peso rose marginally, having touched its strongest against the dollar in more than four months on positive news about the U.S.-Mexico-Canada Agreement trade deal. Key Latin American stock indexes and currencies at 1930 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1086.80 1.5 MSCI LatAm 2836.04 0.78 Brazil Bovespa 112394.19 0.17 Mexico IPC 44290.43 2.54 Chile IPSA 4885.32 1.45 Argentina MerVal 36921.08 3.989 Colombia COLCAP 1628.30 0.6 Currencies Latest Daily % change Brazil real 4.1067 -0.36 Mexico peso 19.0476 0.01 Chile peso 763.5 0.75 Colombia peso 3381 -0.35 Peru sol 3.366 0.27 Argentina peso 59.8150 0.00 (interbank) (Reporting by Susan Mathew in Bengaluru; Editing by Richard Chang)

Decisive UK election, trade deal lift European shares close to record high

13 Dec 2019

A breakthrough in U.S.-China trade talks and hopes of an orderly Brexit after a landslide election victory for UK Prime Minister Boris Johnson lifted Europe's benchmark share index to within striking distance of an all-time high on Friday.

EMERGING MARKETS-Latam FX, stocks rally on upbeat trade news, dovish Fed

12 Dec 2019

(Adds reports of Sino-U.S. trade progress, updates prices) By Susan Mathew Dec 13 Latin American assets firmed on Thursday, with Brazil stocks at a record high as encouraging developments on the U.S.-China trade front, and accommodative stances from major central banks posited a risk-on sentiment that reflected across global markets. MSCI's index of Latam shares rose more than 1% to its highest in five weeks, while its currency counterpart firmed 0.5%. The U.S. Federal Reserve and the European Central Bank both held on rates and said they were likely to do so in the near term. Emerging markets, which have largely mimicked the Fed's easing cycle this year, have found support from major central banks adopting an accommodative stance in the face of an economically damaging trade war between the United States and China. But, headlines on Thursday suggested trade negotiators were making headway, with sources briefed on talks between the two nations saying that a deal has been reached. Trump had tweeted earlier on Thursday that a deal with China is very close, while The Wall Street Journal reported Washington offered to cancel new tariffs on Chinese good due to take effect on Dec. 15 and slash exiting tariffs on $360 billion. "Having some kind of resolution, even if it's a small step, is still a positive step," said Jin Zhang, portfolio manager & senior research analyst at Vontobel Quality Growth. "It reduces uncertainties both in the capital market and the real economy because tariffs are a headwind for businesses. A reduction of that is positive for global growth." Against this backdrop, global stocks rallied. Mexico stocks climbed 1.3%, while Brazil's benchmark stock index touched a record high, rising 1%, with gains on both being broad-based. Brazil's central bank cut interest rates to a record low on Wednesday, as expected and said it would likely pause on its current easing cycle, which prompted the real to its highest level against the dollar in more than one month. Data also showed Brazil's services activity expanded faster- than-expected in October, indicating that certain facets of Latin America's largest economy were recovering at a strong pace. The Mexican peso was largely subdued, as industrial output in the country fell 1.1% in October from the prior month, and 3% from last year. Colombia stocks rose almost a percent, while Chile stocks extended gains into a fourth day. Argentine markets had a tempered reaction on Thursday with bond prices up, risk spreads down and the peso stable after Economy Minister Martin Guzman laid out his vision for handling the debt crisis in Latin America's No. 3 economy. Key Latin American stock indexes and currencies at 1937 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1073.33 1.43 MSCI LatAm 2816.25 1.34 Brazil Bovespa 112101.98 1.03 Mexico IPC 43195.19 1.32 Chile IPSA 4815.40 0.64 Argentina MerVal 35014.35 -0.015 Colombia COLCAP 1620.13 0.92 Currencies Latest Daily % change Brazil real 4.0928 0.64 Mexico peso 19.0875 0.14 Chile peso 769.2 0.09 Colombia peso 3371.75 0.07 Peru sol 3.375 0.50 Argentina peso 59.8150 0.01 (interbank) (Reporting by Susan Mathew in Bengaluru; Editing by Chizu Nomiyama)

ECB, upbeat trade news push up European shares before UK election outcome

12 Dec 2019

Euro zone banks enjoyed their best day in two months on Thursday after comments by new ECB chief Christine Lagarde, and European shares were propelled further by U.S.-China trade developments.

EMERGING MARKETS-Latam FX hold gains as Fed stands pat on rates; Brazil rate decision eyed

11 Dec 2019

(Updates prices) By Susan Mathew Dec 11 Brazil's real hit its highest in a month on Wednesday ahead of a likely interest rate cut by the country's central bank, while other Latin American currencies held gains after the U.S. Federal Reserve kept interest rates unchanged as expected. The real rose 0.4% to 4.1314 against a steady dollar, while Sao Paulo-listed stocks were flat. Analysts say markets have priced in what is expected to be the final rate cut in Brazil interest rates, to a record low 4.5%, as economic indicators show improvement. "We expect unchanged interest rates next year," said You-Na Park-Heger, an analyst with Commerzbank. "Should the central bank leave the door open for interest rate cuts, this should weigh on the BRL." Wednesday's cut would be the bank's fourth this year. Other regional markets rose, barely reacting to an expected move by the U.S. Fed to stand pat on interest rates. It also signaled borrowing costs are likely to remain unchanged indefinitely, with moderate economic growth expected to continue through next year's presidential election. ING's chief international economist, James Knightley, said, however, risks are skewed toward weaker growth amid a benign inflation backdrop in the United States and sees the opportunity for a more rate cuts by the Fed in early 2020. A steady or lower U.S. interest rate bodes well for emerging market currencies, which took a hit last year thanks to a steady rise in the rate. Reports suggesting Washington was laying the groundwork to delay new tariffs against Chinese goods beyond a Dec. 15 deadline also brought in some cautious optimism. Mexico's peso rose 0.7%, while currencies of Chile and Colombia firmed 1%. Chile's peso took support also from increased prices for copper, the country's top export. Chilean equities rose to a three-week high, while those in Mexico rose almost 1%, in line with a move higher on Wall Street. Key Latin American stock indexes and currencies at 1931 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1058.55 0.86 MSCI LatAm 2767.57 0.65 Brazil Bovespa 110678.41 0.01 Mexico IPC 43051.39 0.98 Chile IPSA 4782.78 0.48 Argentina MerVal 34753.99 0.279 Colombia COLCAP 1602.01 -0.06 Currencies Latest Daily % change Brazil real 4.1308 0.41 Mexico peso 19.1344 0.62 Chile peso 769.9 1.12 Colombia peso 3374.24 0.87 Peru sol 3.392 0.21 Argentina peso 59.8150 0.06 (interbank) (Reporting by Susan Mathew in Bengaluru;)

Inditex rally pushes European shares up ahead of UK election, tariff deadline

11 Dec 2019

European shares made small moves on Wednesday in anticipation of pivotal global events such as a U.S.-China tariff deadline, UK general election and some central bank meetings, but a 5.2% rally in Zara owner Inditex ensured a higher close.

EMERGING MARKETS-Mexican stocks log best day in 2-months on USMCA cheer, Brazil shares pause

10 Dec 2019

(Updates prices) By Susan Mathew Dec 10 Brazilian stocks dipped on Tuesday after marking new highs over the past four sessions, while Mexican shares posted their biggest one-day gain in two months as Canada, Mexico and United States agreed to a fresh overhaul of their trade agreement. A revision of new North American Free Trade Agreement, called USMCA which was initially struck last year, adds more stringent oversight of the pact's labor provisions. The deal still needs the approval of lawmakers in all three countries. Mexico's IPC index rose 1.4%, while the peso traded flat against a weaker dollar, after five straight sessions of gains. Broader sentiment was cautious ahead of this weekend's deadline for a new round of U.S. tariffs on Chinese goods. Global markets cut some losses after The Wall Street Journal reported U.S. and Chinese trade negotiators were discussing a delay beyond Dec. 15. Anticipation of the tariffs has kept global equities in tight ranges this week, as investors fear an interim trade deal between Washington and Beijing will not be met before the deadline. "It's fair to say that everyone expects some sort of a phase one (interim) deal ... With so much positive news already priced in, there is much bigger risk of downside if those expectations are disappointed," said Simona Gambarini, markets economist at Capital Economics. Brazilian stocks fell 0.5% after gaining 1.5% over the last four sessions, with financials leading the declines. The real currency barely moved and was last at 4.144 to the dollar. Brazil's central bank will lower its key interest rate to a new low on Wednesday, according to the unanimous view of economists in a Reuters poll, although recent strength in the economy suggests it may be the end of the cutting cycle. Chilean stocks inched up, while the peso weakened 0.9% to post its steepest percentage loss in two weeks. Chile's economy is expected to shrink by 2.5% in the last quarter of 2019, according to a monthly poll of analysts, the latest of several dire predictions following weeks of protests. Argentine stocks fell 3.6%, while the peso was flat as the new Peronist leader Alberto Fernandez assumed the presidency on Tuesday. Fernandez said he planned to implement a "massive" credit system to offer lower rates. Inflation in Argentina runs at an annual rate of above 50% with sky-high interest rates. Latin American stock indexes and currencies at Stock indexes Latest Daily % change MSCI Emerging Markets 1050.05 -0.1 MSCI LatAm 2744.44 -0.09 Brazil Bovespa 110473.33 -0.45 Mexico IPC 42553.84 1.44 Chile IPSA 4759.73 0.24 Argentina MerVal 35076.53 -3.66 Colombia COLCAP 1602.63 -0.17 Currencies Latest Daily % change Brazil real 4.1448 -0.39 Mexico peso 19.2425 -0.07 Chile peso 778.5 -0.42 Colombia peso 3403.5 0.28 Peru sol 3.399 -0.74 Argentina peso 59.8100 0.23 (interbank) (Reporting by Susan Mathew and Ambar Warrick in Bengaluru; Editing by Nick Macfie)

Possible tariff delay lifts European shares off session lows

10 Dec 2019

European shares fell for a second day running on Tuesday, but a 6% jump in drugmaker Sanofi and a report that U.S. and Chinese officials are planning to delay tariffs set to kick in on Dec. 15 helped them end off session lows.

EMERGING MARKETS-Most Latam FX firm, Argentine peso stable after cabinet picks

09 Dec 2019

(Updates prices) By Susan Mathew Dec 9 Latin American currencies firmed on Monday, with Brazil's real touching a month's high and Mexico's peso extending gains to a fifth session, as the dollar held steady in the face of poor export data highlighting the need for a U.S.-China trade deal. In Argentina, the battered peso was stable, while bond prices rose and country risk spreads tightened, showing the market took President-elect Alberto Fernandez's cabinet picks - featuring debt restructuring expert Martin Guzman as economy minister - in stride. Argentine markets had been on edge since Fernandez thumped President Mauricio Macri in the August primary election as it signaled a shift away from Macri's pro-business policy stance. Broader sentiment was swayed by weak export data from China that served to remind investors of the economic slowdown bought about by the Sino-U.S. trade war, although markets have so far held out hope for an interim deal before the Dec. 15 deadline. "If the December tariffs on China go ahead, then our (bullish) view (on EM) is going to come under more significant pressure, with the anticipated EM growth recovery pushed from Q1 2020 to Q3 2020," Morgan Stanley analysts wrote in a note. Investors will also be watching for outcomes of the U.S. and European central bank policy meetings this week, while locally Brazil's rate decision is also awaited. Brazil's real rose 0.2%. On Wednesday, the monetary policy committee is expected to lower its key interest rate to a new low of 4.50%, but stronger-than-expected economic data suggest this may be the last cut in the cycle, a Reuters poll showed. "We think monetary policy is now about to enter a prolonged period of inaction, and the accommodative environment that's here to stay will help accelerate ongoing changes in local credit markets and deepen the recovery," said Gustavo Rangel, chief economist, LATAM at ING. Sao Paulo-listed shares were flat, but carrier Gol Linhas Aereas Inteligentes and its loyalty program, Smiles Fidelidade rallied after Gol made a more generous offer to buy out Smiles. Mexico's peso gained 0.5%, while stocks climbed 0.2% as the country's government urged United States to push through the United States-Mexico-Canada trade deal. Data on Monday showed that Mexico's annual inflation fell below the central bank's 3% target in November, adding to expectations that the bank will cut rates further. Key Latin American stock indexes and currencies at 1937 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1051.70 0.26 MSCI LatAm 2757.13 0.87 Brazil Bovespa 111098.25 -0.02 Mexico IPC 42023.28 0.2 Chile IPSA 4748.20 0.52 Argentina MerVal 36218.77 -0.939 Colombia COLCAP 1610.12 -0.1 Currencies Latest Daily % change Brazil real 4.1305 0.35 Mexico peso 19.2294 0.37 Chile peso 775.2 0.24 Colombia peso 3413.8 0.20 Peru sol 3.374 0.09 Argentina peso 59.9400 0.02 (interbank) (Reporting by Susan Mathew and Ambar Warrick in Bengaluru; Editing by Marguerita Choy)

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