Higher Treasury yields pressure Latam FX, Mexican stocks rise on strong corporate earnings
US economic growth slows in first quarter; inflation surges
Mexico stocks rise after Grupo Mexico, Cemex, Walmex earnings
Ecuador's bonds rise; country reaches four-year, $4 bln staff-level agreement with IMF
Petrobras shareholders approve dividend payout
Cement maker Cemex's Q1 profit climbs despite dip in volumes
Latam FX off 0.2%, stocks up 0.2%
Updated at 3:45pm ET/1945 GMT
By Bansari Mayur Kamdar and Lisa Pauline Mattackal
April 25 (Reuters) -Latin American currencies fell on Thursday, pressured by higher U.S. Treasury yields after hotter-than-expected U.S. inflation data, though Mexican stocks were on track for their highest close in two weeks after strong earnings reports from heavyweight companies.
The MSCI index for Latin American currencies .MILA00000CUS slid 0.2%.
Benchmark U.S. 10-year Treasury note yields touched their highest since November after U.S. core inflation data rose by 3.7%, above expectations for a 3.4% increase, further denting chances for forthcoming interest rate cuts from the Federal Reserve. US/
"What seems to be now causing some havoc across markets is the thought that we may witness a cycle of 'stagflation' in the U.S., a time when the economy stagnates while prices remain elevated without reprieve," said Juan Perez, director of trading at Monex.
Meanwhile, Mexican stocks rose .MXX 1.1%, on track for its highest close since April 9 as shares of companies including Walmex and Grupo Mexico rose after reporting quarterly results.
Latin American currencies have been hit in recent weeks as the difference between riskier emerging market assets and Treasury yields has narrowed, as many central banks in the region still hope to cut interest rates to stimulate economic growth in contrast to the Fed.
"LATAM odds of exercising loose monetary policy and stay stimulative are basically cemented," Perez said.
Mexico's peso MXN= Brazil's real BRL= Colombia's peso COP= and Peru's sol shed between 0.3% and 0.9% against the greenback.
Bucking regional weakness, top copper producer Chile's peso CLP= edged 0.2% higher, tracking firm prices of the metal as funds chased the market higher after a takeover bid by BHP for Anglo American, which analysts said was focused on copper.
Copper prices also boosted mining and transport conglomerate Grupo Mexico GMEXICOB.MX which rose 2.6% despite reporting a 16% drop in first-quarter net profit.
Cement-maker Cemex CEMEXCPO.MX rose 2.4% after reporting a rise in first-quarter net profit, while Walmart de Mexico WALMEX.MX jumped over 2% after posting above-forecast net profit.
Ecuadorian authorities reached a staff-level agreement with the International Monetary Fund to underpin a four-year, $4 billion extended fund facility.
Ecuador bonds rose, with spreads to comparable U.S. debt narrowing by 40 basis points to 1,119 basis points, on track to end the day at the tightest since February 2023.
A basket of Latin American stocks .MILA00000PUS rose 0.2%.
Brazil's Vale VALE3.SA weakened 2.4% after reporting lower earnings from the year-ago period.
Meanwhile, shares of oil giant Petrobras PETR4.SA jumped 2.4% after shareholders approved payout of 50% of previously withheld dividends.
Turkey's lira TRYTOM=D3 was mostly flat after the country's central bank kept its main interest rate steady at 50%, as expected.
Key Latin American stock indexes and currencies at 1945 GMT:
Latest | Daily % change | |
MSCI Emerging Markets .MSCIEF | 1029.30 | -0.52 |
MSCI LatAm .MILA00000PUS | 2424.72 | 0.16 |
Brazil Bovespa .BVSP | 124633.53 | -0.09 |
Mexico IPC .MXX | 57091.79 | 1.11 |
Chile IPSA .SPIPSA | 6337.91 | -0.4 |
Argentina MerVal .MERV | 1234931.10 | 2.683 |
Colombia COLCAP .COLCAP | 1349.56 | 0.46 |
Currencies | Latest | Daily % change |
Brazil real BRBY | 5.1636 | -0.33 |
Mexico peso MXN=D2 | 17.2020 | -0.85 |
Chile peso CLP=CL | 948.2 | 0.15 |
Colombia peso COP= | 3963.81 | -0.63 |
Peru sol PEN=PE | 3.742 | -0.68 |
Argentina peso (interbank) ARS=RASL | 873.5000 | 0.00 |
Argentina peso (parallel) ARSB= | 1035 | 0.00 |
Reporting by Bansari Mayur Kamdar and Lisa Mattackal in Bengaluru; Editing by Richard Chang and Daniel Wallis
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