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EMERGING MARKETS-Most Latam currencies firm on trade optimism, stocks largely down

Susan Mathew

down@ (Updates prices) June 26 (Reuters) - Latin American stocks mostly fell and Brazil's real traded flat on Wednesday, while most other regional currencies firmed on measured optimism around the Sino-U.S. trade dispute. Against a steady dollar, most Latam currencies recovered from losses logged last session after comments by U.S. Federal Reserve officials quashed hopes of a half-point cut in interest rates. Mexico's peso firmed 0.5% after three days of losses, while Colombia's currency rose 0.1% with support from rising oil prices. Chile's peso climbed 0.3%.

Trade optimism centered around U.S. Treasury Secretary Steven Mnuchin's comment in a CNBC interview that Washington and Beijing were 90% through in making a trade deal, which U.S. President Donald Trump later reiterated. Trump said it was possible he would emerge with a deal from a meeting with Chinese leader Xi Jinping this weekend, after earlier threatening to impose "very substantial" tariffs on China if a deal couldn't be reached at the meeting. Some analysts still remained skeptical. "Given the differences between the two sides, we suspect that any truce will prove temporary. The conclusions of the summit itself are likely to be vague," wrote Jennifer McKeown, head of global economics service at Capital Economics. The trade dispute has dominated market moves for almost a year and contributed to a slowdown in global growth.

Brazil's real was little changed on the day. The country's primary budget deficit widened more than expected in May, the Treasury said - further evidence of urgency in the need to pass the bill that overhauls the country's bloated pension system. The bill is expected to go to a vote in congressional committee as soon as Thursday. Presidential spokesman Otavio Rego Barros said on Tuesday the lower house of Congress would vote on the reform before lawmakers break for recess on July 18.

Analysts broadly expect the real to remain pressured until the pension reform bill is passed. Stocks in Brazil rose 0.4% with miner Vale gaining despite a slip in iron ore prices. A Vale executive said it will spend 1.8 billion reais ($469 million) on safety and environmental recovery measures for the structures that remain standing near its Brumadinho dam that collapsed five months ago, killing nearly 250 people.

Mexican shares slipped marginally. Energy infrastructure firm IEnova fell the most, down 3.6% after it said state power utility CFE had requested arbitration on a dispute over a natural gas pipeline. In Argentina, the peso slipped 0.9% after three days of gains when it added 2.6%, while stocks slipped for the first time in six days, down 0.9%.

Key Latin American stock indexes and currencies at 1941 GMT:

Stock indexes Latest Daily %


MSCI Emerging Markets 1048.67 0.32MSCI LatAm 2840.62 0.02Brazil Bovespa 100495.48 0.4Mexico IPC 43766.64 -0.06Chile IPSA 5086.71 -0.23Argentina MerVal 39917.67 -0.93Colombia IGBC 12616.23 -0.28Currencies Latest Daily %


Brazil real 3.8473 0.10Mexico peso 19.1240 0.50Chile peso 679.4 0.21Colombia peso 3181.28 0.14Peru sol 3.293 0.33Argentina peso 42.7000 -0.70


(Reporting by Susan Mathew in Bengaluru; Editing by Cynthia Osterman)