Latin American markets rise after U.S. inflation data
Updated at 1513 GMT
Brazil retail sales slip in June
Argentina inflation due later in the day
Rouble reverses early losses
By Lisa Pauline Mattackal
Aug 14 (Reuters) -Latin American stocks and currencies largely rose on Wednesday after a closely watched U.S. inflation print came in broadly in line with expectations, keeping a September start to policy easing by the Federal Reserve firmly on the table.
The U.S. inflation report showed consumer prices rebounded as expected in July, but the trend remained consistent with subsiding inflation.
The signs of moderation in price pressures kept a September start to U.S. policy easing alive, boosting emerging market assets that typically benefit from lower borrowing costs in the world's largest economy.
MSCI's index of stocks in Latin America .MILA00000PUS jumped 0.9%, while an index of currencies in the region .MILA00000CUS rose 0.7% against a weaker dollar =USD. Both were trading at their highest levels in more than a month.
"The data came in pretty much in line ... it gives the Fed space to not have to make any panicked moves," said Ben Pace, CIO of Cerity Partners.
Mexico's peso MXN= led regional currency gains, jumping 0.8%.
Meanwhile, Brazil's real BRL= gained 0.1% against the dollar. Data showed June retail sales volumes slipped 1%, down for the first time in six months.
The U.S. data was a welcome signal as worries about a slowdown in the world's biggest economy have sent tremors through emerging markets recently, even as investors look to the start of the Fed's easing cycle.
However, traders trimmed bets on a larger-than-expected interest-rate cut of 50 basis points, according to CME's FedWatch.
Stocks in Argentina .MERV and Brazil .BVSP led regional equity gains, rising 2.1% and 0.3%, respectively, with the Merval index touching a three-week high.
Chinese industrial output and retail sales data are on deck Thursday, and will be closely watched for signals on demand and likely government stimulus in the world's second largest economy.
"We’ve decreased our weighting to emerging markets, there's concern about a full weighting because China's so important to whatever else happens in the emerging market space," Pace said.
Elsewhere, Bank of Mexico Deputy Governor Jonathan Heath said he viewed the central bank's recent interest rate cut as premature given rises in headline inflation.
Argentina's peso ARS=RASL was little changed on official markets ahead of an inflation print later in the day. Argentina's annual inflation stands at around 271%, the highest in the world.
Analysts predict July inflation will come in at 4% on a monthly basis, the lowest since the start of 2022.
Shares of Colombia's Ecopetrol ECO.CN lost 0.9% after the state-owned oil firm on Tuesday reported a 17% fall in second-quarter net profit.
Elsewhere, Russia's rouble RUB= recouped ground, strengthening back below 89 per dollar. The currency has been battered in the past week as Ukraine launched a cross-border attack on Aug. 6.
HIGHLIGHTS
** Turkey's central bank expected to hold rates steady in August
** BHP removes striking workers at huge Chile copper mine, output at risk
** Brazil Senate committee again postpones vote on central bank financial autonomy
Key Latin American stock indexes and currencies
MSCI Emerging Markets .MSCIEF | 1077.15 | 0.57 |
MSCI LatAm .MILA00000PUS | 2296.27 | 0.93 |
Brazil Bovespa .BVSP | 132805.8 | 0.31 |
Mexico IPC .MXX | 53731.09 | 0.11 |
Chile IPSA .SPIPSA | 6303.45 | -1.03 |
Argentina Merval .MERV | 1626192.15 | 2.167 |
Colombia COLCAP .COLCAP | 1348.04 | 0.31 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.4471 | 0.12 |
Mexico peso MXN= | 18.8457 | 0.8 |
Chile peso CLP= | 929.34 | 0.12 |
Colombia peso COP= | 4018 | 0.33 |
Peru sol PEN= | 3.7356 | -0.19 |
Argentina peso (interbank) ARS=RASL | 940.5 | -0.053163211 |
Argentina peso (parallel) ARSB= | 1335 | 1.872659176 |
Battling inflation in Argentina Battling inflation in Argentina https://tmsnrt.rs/36BZUr1
Reporting by Lisa Mattackal in Bengaluru; Editing by Jan Harvey
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