Latam assets eye strong gains in stormy week; Brazil's real jumps
Brazil inflation rises in July
Peruvian sol falls after surprise rate cut
Argentina's Merval leads weekly gains in Latam
Stocks up 2.5%, FX up 1.5%
Updated at 4:00 p.m. ET/ 2000 GMT
By Lisa Pauline Mattackal and Ankika Biswas
Aug 9 (Reuters) -Latin American stocks rose on Friday, continuing a strong run for risky emergingmarkets on easing worries about U.S. economic growth, while Brazil's real gained in a mixed session for currencies after the country's strong inflationfigures.
MSCI's Latin American stocks index .MILA00000PUS leapt 2.5% and theregional currency index .MILA00000CUS gained 1.5%, with both hitting near three-week highs.
The indexes were headed for their first weekly advance in four, sharply recovering from a heavy selloff at the week's start sparked by U.S. recession fears. While the currencies index was on track for its best week since March 2023, the share indexwas poised for its biggest weekly gain since October.
Both have outperformed the broader emerging markets stocks .MSCIEF and currency indexes .MIEM00000CUS for the week.
Brazil's real rose 0.7% to a three-week high against the dollar =USD afterconsumer prices came in slightly above expectations in July, adding to policy uncertainties after the central bank said it would raise interest rates if needed to control inflation.
The Chilean peso CLP= rose 0.4%, hitting an over one-week high, tracking a rebound in copper prices, whilePeru's sol PEN=PE lost 0.4% after an unexpected interest rate cut on Thursday.
"We continue to see additional room for cuts (for Peru) this year, particularly after Fed cuts materialize, but expect upcoming decisions to be more CPI dependent, even if space is tight for easing," Citi analysts wrote.
Among the top Latam currency laggards for the week,Colombia's peso COP= eased from the over one-week high hit in early trade to slip 0.3%.
Meanwhile, Mexico'speso MXN= was flat after its central bank cut interest rates on Thursday but signaled it expected higher inflation.
"The balance of risks did not change. We continue to forecast three additional 25bp rate cuts until the end of 2024," economists at Goldman Sachs said in a note.
Mexico's peso was among the worst-hit currencies at the start of a turbulent week that in response to some poor U.S. economic data that deepened worries about slowing global growth and sparked a massive unwinding of yen-funded carry trades.
U.S. jobless claims data on Thursday helped risk assets recover, while stronger China inflation data also helped soothe worries about deflation in the world's second largest economy.
On the stocks front, Argentina's benchmark stock index .MERV was on track to emerge as the top weekly gainer among its Latam peers, last up nearly 11% for the week.
Emerging market equities have seen inflows of $2.3 billion over the past 10 weeks, according to data from Bank of America Global Research. However, EM debt has seen outflows for the past two weeks.
Key Latin American stock indexes and currencies at 2000 GMT:
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1063.28 | 1.62 |
MSCI LatAm .MILA00000PUS | 2244.09 | 2.48 |
Brazil Bovespa .BVSP | 130455.46 | 1.39 |
Mexico IPC .MXX | 53075.56 | 0.38 |
Chile IPSA .SPIPSA | 6329.55 | 0.57 |
Argentina Merval .MERV | 1579054.76 | 3.182 |
Colombia COLCAP .COLCAP | 1310.36 | 0.86 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.5102 | 0.7 |
Mexico peso MXN= | 18.869 | -0.05 |
Chile peso CLP= | 931.7 | 0.37 |
Colombia peso COP= | 4069.43 | -0.26 |
Peru sol PEN= | 3.7232 | -0.38 |
Argentina peso (interbank) ARS=RASL | 936.5 | 0 |
Argentina peso (parallel) ARSB= | 1335 | 2.996254682 |
Reporting by Lisa Mattackal in Bengaluru; Editing by Tomasz Janowski and Marguerita Choy
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