EMERGING MARKETS-Latam stocks jump; inflation in Brazil, Mexico exceeds expectations

EMERGING MARKETS-Latam stocks jump; inflation in Brazil, Mexico exceeds expectations

* Mexico early January prices exceed market forecasts * Venezuela’s inflation slows to 234% in 2022, vice president says * Brazil inflation slightly higher than forecast in early January * Stocks up 1.1%, currencies up 0.4% (Updates prices, adds economist’s comment) By Bansari Mayur Kamdar and Amruta Khandekar Jan 24 (Reuters) – Latin American stocks extended gains for the third straight session on Tuesday, while investors assessed inflation data from Brazil and Mexico and awaited a number of interest rate decisions from central banks in the region. The MSCI’s index for Latin American stocks jumped 1.1%, outperforming a 0.2% rise in the broader EM stocks index. Brazil’s Bovespa index rose 0.5% though gains were limited by a near 1% fall in shares of Brazilian state-run oil company Petrobras which said it would increase refinery gate gasoline prices. Latin America’s currencies index added 0.4%with the Brazilian real up 1% against the dollar and close to its session high. Data showed Brazil’s annual consumer prices came in slightly above market expectations in the month to mid-January, as policymakers in Latin America’s largest economy work to lower inflation to the central bank’s target. In Mexico, headline inflation accelerated and exceeded expectations in early January, data from the national statistics agency showed, marking the first monthly pickup since September as markets brace for fresh interest rate hikes ahead. Analysts said a 25 basis point rate hike was likely from the Mexican central bank at its February meeting. The Mexican peso was flat against the dollar, while stocks in Mexico rose 1%. Elsewhere in Latin America, top copper exporter Chile’s peso jumped 1.6% to hit an over nine-month high against the greenback while oil exporter Colombia’s peso rose 1.1%, even against lacklustre commodity prices. Investors are awaiting monetary policy decisions from the central banks of both countries later in the week, with Chile being the first to deliver its interest rate decision on Thursday. “Speculation that briefly built in late 2022 that the central bank of Chile may cut in January has been done away with given relatively elevated inflation. Our official view is that the central bank will do a slight cut but we can’t rule out a hold,” said Juan Manuel Herrera Betancourt, senior economist at Scotiabank. “As for Colombia, there is a very strong chance that they will hike by 100 basis points on Friday. This move is against very steep inflation in Colombia that hasn’t shown very clear signs that it has crested.” Meanwhile, Venezuelan Vice President Delcy Rodriguez said inflation hit 234% in 2022, a slowdown from the previous year, which was more than 686%, according to the central bank. Among other emerging market peers, Hungary’s forint gained 1.5% against the euro after the National Bank of Hungary kept its base rate at 13% the highest in the European Union, as inflation shows no respite. Latin American stock indexes and currencies at 1940 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1040.23 0.15 MSCI LatAm 2316.29 1.12 Brazil Bovespa 112314.71 0.52 Mexico IPC 54937.34 1.1 Chile IPSA 5256.53 -1.04 Argentina MerVal 248988.80 -0.549 Colombia COLCAP 1315.98 -1.19 Currencies Latest Daily % change Brazil real 5.1447 1.04 Mexico peso 18.8103 -0.05 Chile peso 800 1.55 Colombia peso 4505.25 1.14 Peru sol 3.893 -0.74 Argentina peso 184.6800 -0.17 (interbank) Argentina peso 377 -0.27 (parallel) (Reporting by Bansari Mayur Kamdar and Amruta Khandekar in Bengaluru Editing by Alistair Bell and Grant McCool)

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