EMERGING MARKETS-Latam markets post mild gains, U.S. Fed meet in focus

By Ambar Warrick
Sept 13 (Reuters) – Latin American markets edged up on
Friday as easing Sino-U.S. trade tensions continued to help risk
appetite, although gains were capped by investors scaling back
expectations of aggressive easing by the U.S. Federal Reserve.
Conciliatory trade measures between Washington and Beijing
had set up most regional markets for weekly gains, with stimulus
measures by the European Central Bank also lending support.
Regional currencies firmed slightly against
a steady dollar, and were set to add about 0.5% for the
week.
The Brazilian real rose about 0.1%. A central bank
indicator showed that economic activity fell slightly in July,
in contrast to other data that suggested the economy started the
third quarter on strong footing.
Markets are now looking to a Brazilian central bank meeting
next week, where the bank is widely expected to cut its
record-low rates to shore up Latin America’s largest economy.

Better-than-expected inflation and retail sales data in the
United States saw market participants toning down their
expectations for policy easing by the Fed next week.

“The market has taken back a lot of their easing
expectations, and I think that’s overall negative for EM,” said
Win Thin, global head of emerging market currency strategy at
Brown Brothers Harriman.
“Many asset markets have priced in an aggressive Fed easing,
and as markets take that back they’re going to suffer.”
Traders currently see an 88.8% chance of a quarter
percentage point cut from the Fed this month, down from 90% a
week ago, according to CME’s FedWatch.
MSCI’s index of Latin American stocks rose
0.3%, and was set to add about 1.5% for the week, its third
straight week of gains.
Brazil’s Sao Paolo index was flat as gains in
financials and material stocks were offset by losses in a bevy
of sectors. The index was set to add 1.3% for the week, its
third straight week of gains.
Mexican stocks rose about 0.7%. President Andres
Manuel Lopez Obrador said on Friday that state oil company Pemex
will consolidate its finances and “has a bright future”, a day
after the debt-ridden state oil firm carried out the biggest
refinancing operation in its history.
The Mexican peso added about 0.4%.

Latin American stock indexes and currencies at 1446 GMT

Stock indexes Daily % change
Latest
MSCI Emerging Markets 1028.75 0.63

MSCI LatAm 2724.81 0.28

Brazil Bovespa 104430.84 0.06

Mexico IPC 42949.39 0.65

Chile IPSA 4982.34 0.12

Argentina MerVal 29652.93 1.848

Colombia IGBC 12864.94 -0.24

Currencies Daily % change

Latest
Brazil real 4.0563 0.07

Mexico peso 19.3665 0.33

Chile peso 707.05 0.28

Colombia peso 3355.27 0.23
Peru sol 3.3108 0.40

Argentina peso 56.1600 -0.07
(interbank)

(Reporting by Ambar Warrick in Bengaluru
Editing by Alistair Bell)

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