EM assets slump as investors flee risk; Mexican peso leads Latam FX lower as carry trades unwind
Updates prices at 1530 GMT
MSCI EM stocks down over 4% amid global selloff
Peso, rand, and other high-yielding currencies slump
Prices of emerging markets bonds slip
Bradesco jumps after results
By Lisa Pauline Mattackal
Aug 5 (Reuters) -Indexes tracking emerging market assets tumbled to multi-month lows on Monday, while high yielding currencies slumped against the dollar as U.S. recession worries sent investors piling into safe-haven assets, such as the Japanese yen.
The yen JPY=EBS leapt to a seven-month high against the dollar as crowded carry trades unwound, pressuring emerging market currencies that have benefited from the strategy where investors borrow in currencies of countries with lower rates and invest in assets offering higher returns.
Mexico's peso MXN= lost 1.1% against the U.S. currency, breaching the 20 pesos per dollar barrier and touching its lowest since 2022.
"The likes of MXN/JPY were the darlings of the carry trade for at least two years, and those days are over," said Patrick Reid, co-founder of FX consultancy The Adamis Principle.
On the equity front, MSCI's index of global emerging market stocks .MSCIEF plunged 4.2% to its lowest since April, as a stock rout that began in early Asia trade made its way through regional bourses.
An index of Latin American equities .MILA00000PUS tumbled 1.7% to its lowest since 2023. Stock markets in Argentina, .MERV Colombia .COLCAP, Chile .SPIPSA and Brazil .BVSP dropped between 1% and 2.7%.
The risk-off mood continued from Friday, when weaker-than-expected U.S. jobs report triggered worries of recession in the world's largest economy. This compounded concerns for emerging markets over worries in China, poor tech sector earnings, and escalating geopolitical tensions in the Middle East.
"The drivers of today remain the same as Friday – worries about the escalation risks in Middle East, fears of a global recession from policy mistakes linked to Bank of Japan hikes, (the Fed) being behind (the) curve for jobs," Bob Savage, head of market strategy and insights at BNY Mellon wrote in a note.
South Africa's rand ZAR= and the Egyptian pound EGP= slumped more than 1% against the dollar, while the Colombian peso COP= dropped nearly 1% to its lowest since October.
Brazil's real BRL= fell to its lowest since 2021, while an index of Latin American currencies .MILA00000CUS dropped to its lowest since June 2023.
Emerging market bonds also lost ground as U.S. Treasury yields slipped, with longer-dated bonds in Argentina 040114HW3=1M, Nigeria 65412JAA1= and Egypt EG195305749= down over 2 cents on the dollar.
Traders are now pricing in a 50-basis-point interest rate cut at the Federal Reserve's September meeting, compared to a 25 bps broadly expected last week as per CME's FedWatch.
Turkey's BIST-100 index .XU100 was set for its worst day since October after trading was halted twice following heavy losses, with the lira TRYTOM=D3 hitting a record low against the dollar.
On a more upbeat note, shares of Brazil's Bradesco BBDC4.SA jumped 5.6%, bucking broader declines on the Bovespa index after the financial services company reported better than expected net income.
HIGHLIGHTS
** Brazil's Petrobras confirms gas discovery in Colombia
** PREVIEW- South African banks' earnings in spotlight ahead of first rate cuts
** Protests in Nigeria over the soaring cost of living ebb after deadly crackdown
** Indian rupee is worst Asian currency in U-turn as yuan carry trades unwind
Key Latin American stock indexes and currencies
Latest | Daily % change | |
MSCI Emerging Markets .MSCIEF | 1016.67 | -4.2 |
MSCI LatAm .MILA00000PUS | 2086.25 | -1.84 |
Brazil Bovespa .BVSP | 124497.42 | -1.08 |
Mexico IPC .MXX | 51984.60 | -0.49 |
Chile IPSA .SPIPSA | 6167.91 | -2.34 |
Argentina MerVal .MERV | 1401643.68 | -2.212 |
Colombia COLCAP .COLCAP | 1281.65 | -2.67 |
Currencies | Latest | Daily % change |
Brazil real BRBY | 5.7499 | -0.70 |
Mexico peso MXN=D2 | 19.4108 | -1.28 |
Chile peso CLP=CL | 953.7 | -0.37 |
Colombia peso COP= | 4176.32 | -1.10 |
Peru sol PEN=PE | 3.747 | -0.85 |
Argentina peso (interbank) ARS=RASL | 935.0000 | -0.16 |
Argentina peso (parallel) ARSB= | 1390 | 0.36 |
Reporting by Lisa Mattackal in Bengaluru; Editing by Tomasz Janowski
Asset collegati
Ultime news
Disclaimer: le entità di XM Group forniscono servizi di sola esecuzione e accesso al nostro servizio di trading online, che permette all'individuo di visualizzare e/o utilizzare i contenuti disponibili sul sito o attraverso di esso; non ha il proposito di modificare o espandere le proprie funzioni, né le modifica o espande. L'accesso e l'utilizzo sono sempre soggetti a: (i) Termini e condizioni; (ii) Avvertenza sui rischi e (iii) Disclaimer completo. Tali contenuti sono perciò forniti a scopo puramente informativo. Nello specifico, ti preghiamo di considerare che i contenuti del nostro servizio di trading online non rappresentano un sollecito né un'offerta ad operare sui mercati finanziari. Il trading su qualsiasi mercato finanziario comporta un notevole livello di rischio per il tuo capitale.
Tutto il materiale pubblicato sul nostro servizio di trading online è unicamente a scopo educativo e informativo, e non contiene (e non dovrebbe essere considerato come contenente) consigli e raccomandazioni di carattere finanziario, di trading o fiscale, né informazioni riguardanti i nostri prezzi di trading, offerte o solleciti riguardanti transazioni che possano coinvolgere strumenti finanziari, oppure promozioni finanziarie da te non richieste.
Tutti i contenuti di terze parti, oltre ai contenuti offerti da XM, siano essi opinioni, news, ricerca, analisi, prezzi, altre informazioni o link a siti di terzi presenti su questo sito, sono forniti "così com'è", e vanno considerati come commenti generali sui mercati; per questo motivo, non possono essere visti come consigli di investimento. Dato che tutti i contenuti sono intesi come ricerche di investimento, devi considerare e accettare che non sono stati preparati né creati seguendo i requisiti normativi pensati per promuovere l'indipendenza delle ricerche di investimento; per questo motivo, questi contenuti devono essere considerati come comunicazioni di marketing in base alle leggi e normative vigenti. Assicurati di avere letto e compreso pienamente la nostra Notifica sulla ricerca di investimento non indipendente e la nostra Informativa sul rischio riguardante le informazioni sopra citate; tali documenti sono consultabili qui.
