Latam assets dip, Mexico's peso leads FX losses
Mexican retail sales fall in June
Mexico stocks outlook dampened by weaker economic prospects
JPM: MSCI upgrade could put $1 bln into Argentine stocks
Stocks, currencies down 1% each
Updated at 1930 GMT
By Lisa Pauline Mattackal and Ankika Biswas
Aug 20 (Reuters) -Latin American stocks and currencies lagged broader emerging markets on Tuesday, retreating as weaker commodity prices and worries about local economic growth offset optimism about potentially lower U.S. interest rates.
An index tracking Latam currencies against the dollar .MILA00000CUS lost 1% to slip to a one-week low after hitting a one-month high in the prior session.
The regional equities index .MILA00000PUS also fell 1%, with both the indexes on pace for their worst day since a global equity market sell-off in early August.
Mexico's peso MXN=D3 led Latin American currencies lower, down nearly 2%, followed closely by the Brazilian real BRL=.
Mexican retail sales for June fell 0.5%, slipping 3.9% on an annual basis.
"Going forward, (Mexico's) household consumption of goods and services is likely to face headwinds from high rates, post-election uncertainty, and weakening fiscal impulse," economists at Goldman Sachs said in a note.
A Reuters poll showed the outlook for Mexico's stocks has been hurt by weaker prospects for the economy and investor worries about some of the new government's planned reforms.
Mexico's benchmark stock index .MXX was down 0.3% on the day and down nearly 6% for the year.
Meanwhile, Brazil's central bank chief said the external scenario has improved but the policymakers' message remains the same as in the minutes of their last policy decision, with no forward guidance provided.
After leading the global monetary policy tightening cycle following the COVID-19 pandemic, major Latam central banks now face a new test to their credibility as pressure grows to ease rates even amid resurgent inflation worries.
Chile's peso CLP= and Peru's sol PEN= also fell, declining 0.1% and 0.6%, tracking weak copper prices.
Declining oil prices also weighed on Latin American assets. Shares of oil companies in the region, such as Colombia's Ecopetrol ECO.CN and Brazil's Petrobras PETR4.SA, dropped.
Brazil's Bovespa .BVSP, however, edged up 0.3% after closing at a record high in the previous session.
The region lagged broader global emerging market stocks .MSCIEF and currencies .MIEM00000CUS, which rose as investors hoped minutes from the U.S. central bank's July 30-31 meeting and Federal Reserve Chair Jerome Powell's speech at the Jackson Hole, Wyoming, economic conference on Friday would provide more clues on the start of policy easing next month.
Meanwhile, JPMorgan said a potential upgrade for Argentina to emerging market status from index provider MSCI could see nearly $1 billion in investor funds pour into the country's stocks.
The Merval stocks index .MERV is set to extend its recent winning streak to nine days, but came sharply off the day's highs.
HIGHLIGHTS
** More Mexican judges to join strike over proposed judicial overhaul
Key Latin American stock indexes and currencies at 1930 GMT:
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1104.95 | 0.13 |
MSCI LatAm .MILA00000PUS | 2320.61 | -1.07 |
Brazil Bovespa .BVSP | 136199.03 | 0.31 |
Mexico IPC .MXX | 53952.15 | -0.28 |
Chile IPSA .SPIPSA | 6498.04 | 0.61 |
Argentina Merval .MERV | 1645499.62 | -0.699 |
Colombia COLCAP .COLCAP | 1342.84 | -1.34 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.484 | -1.33 |
Mexico peso MXN= | 18.9778 | -1.72 |
Chile peso CLP= | 924 | -0.08 |
Colombia peso COP= | 4011.91 | 0.4 |
Peru sol PEN= | 3.7451 | -0.56 |
Argentina peso (interbank) ARS=RASL | 943.5 | 0 |
Argentina peso (parallel) ARSB= | 1335 | 1.123595506 |
Benchmark interest rates in Latin America https://reut.rs/4dOlWHU
Reporting by Lisa Mattackal and Ankika Biswas in Bengaluru; Editing by Paul Simao and Jonathan Oatis
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