Latam FX, stocks trade in a tight range, Banxico decision due
Updated at 1514 GMT
Brazil's economic activity beats expectations in September
Argentina's risk index falls to lowest level since July 2019
Colombia's Ecopetrol third-quarter profit slides 28%
MSCI Latam stocks index off 0.1%, FX up 0.4%
By Johann M Cherian
Nov 14 (Reuters) -Most currencies and stocks in top Latin American economies traded in a tight range in early trading on Thursday, while Mexico's peso slipped, with investors pricing in an interest rate cut by Banxico later in the day.
Mexico's peso MXN= dipped 0.4% to 20.58 against the dollar, with most economists forecasting the local central bank could lower borrowing costs by 25 basis points. However, bonds MX10YT=RR, MX30YT=RR were unchanged.
Uncertainty over President-elect Donald Trump's policies on trade, immigration and security following his Nov. 5 election victory also prevailed, with the peso experiencing the steepest declines among peers so far this year.
"Banxico must also weigh the pass-through from depreciation of the (peso), the prospect for further capital flight, and the stability of the capital account. That could induce a hawkish tone, and a more neutral policy bias, than in September's statement," strategists led by Thierry Wizman said.
Brazil's real BRL= edged up 0.5% against the dollar after the latest data pointed to robust economic activity in the region's largest economy, underscoring expectations for coming rate hikes by the central bank.
Markets awaited any measures to stabilize public finances, with Brazil's central bank chief saying the government must cut spending to the bone, as per a report.
Currencies of copper producers Chile CLP= and Peru PEN= edged up 0.6% and 0.3% respectively, while Colombia's peso COP= firmed 0.2%
Traders also monitored an Asia Pacific Economic Cooperation summit in Peru alongside a Group of 20 leading economies forum in Brazil against the backdrop of Trump's recent win.
With the president-elect's policies seen as stoking inflation, all eyes will be on Federal Reserve Chair Jerome Powell's remarks later Thursday.
An index tracking top currencies in the region .MILA00000CUS edged 0.4% higher. Ratings agency S&P Global said it expects any delay in Fed rate cuts to also slow the pace of monetary easing across the region.
Further, private fixed investment in Mexico could soften until there is more clarity on trade policies from the incoming U.S. administration, it said. Mexico had benefited from U.S. companies shifting some operations closer to home over the past two years.
On the equities front, MSCI's equity index tracking regional stocks .MILA00000PUS dipped 0.1%, although Brazil's Bovespa index .BVSP was up 0.3%.
Mexico's benchmark stocks index .MXX was flat.
Colombia's Colcap index .COLCAP crept up 0.2%, with state-owned oil producer Ecopetrol ECO.CN rising 1.5% after reporting third-quarter results.
Argentina's Merval index .MERV added 1.3%, while hard-currency bonds maturing in 2029 040114HX1=1M also rose.
The JPMorgan risk benchmark, which shows the yield spread on bonds versus comparable U.S. debt, reached its lowest level since July 2019. Markets were optimistic about the policies of Argentina President Javier Milei, who is also seen as a political ally of Trump.
Key Latin American stock indexes and currencies:
Latin American market prices from Reuters | ||
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1084.68 | -0.82 |
MSCI LatAm .MILA00000PUS | 2087.39 | -0.16 |
Brazil Bovespa .BVSP | 128154.57 | 0.33 |
Mexico IPC .MXX | 50759.81 | 0.02 |
Chile IPSA .SPIPSA | 6521.05 | -0.57 |
Argentina Merval .MERV | 2069729.62 | 1.331 |
Colombia COLCAP .COLCAP | 1340.34 | 0.19 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.7764 | 0.51 |
Mexico peso MXN= | 20.582 | -0.44 |
Chile peso CLP= | 973.05 | 0.58 |
Colombia peso COP= | 4469.46 | 0.18 |
Peru sol PEN= | 3.796 | 0.33 |
Argentina peso (interbank) ARS=RASL | 998.5 | flat |
Argentina peso (parallel) ARSB= | 1115 | 2.19 |
Reporting by Johann M Cherian in Bengaluru; editing by Jonathan Oatis
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