By Johann M Cherian and Lisa Pauline Mattackal
Oct 20 (Reuters) – Latin American stocks fell on Friday, on track for weekly declines on worries about higher U.S. interest rates and continued escalations of conflict in the Middle East, though currencies in the region rose against the dollar.
Broadly, MSCI’s gauge of Latin America stocks .MILA00000PUS dipped 0.5%, while the basket of regional currencies .MILA00000CUS gained 0.4%.
Emerging market currencies traded higher as the U.S. dollar was little changed, but global stocks dipped as benchmark 10-year Treasury yields remained at 16-year highs after briefly crossing 5%. FRX/MKTS/GLOB
“This is a poor month-to-month headline, in line with the message from recent activity numbers,” said Andres Abadia, chief Latam economist at Pantheon Macroeconomics.
“Weakening retail/commerce activity and slowing services output have fully eclipsed the modest recovery in the industrial sector in August.”
Meanwhile, Mexico’s benchmark index .MXX dropped 1.2% following data that showed a drop in August retail sales, mainly driven by a fall in supermarket and department sales as borrowing costs remained high.
However, Mexico’s peso MXN= and Colombia’s peso COP= jumped 0.5% and 1.1% against the dollar, also building on gains in crude prices on heightened fears that the Middle East crisis may spread to other countries in the region, posing a threat to crucial oil supply. O/R
South American equities are on course for weekly declines of 2%, as investors turned cautious on riskier assets after a U.S. bond sell-off, with uncertainties surrounding the Israel-Hamas conflict also weighing on sentiment.
Latam currency index edged up 0.1% for the week.
Argentina, South America’s second-largest economy, is gearing up for presidential elections on Sunday with libertarian Javier Milei, who seeks to shutter the central bank and dollarize the economy, in pole position to win.
Argentina’s stock index .MERV gained 4.2%, while its currency ARSB= traded at 880 to the dollar in the informal parallel market.
Elsewhere, Chile’s peso was flat and its stocks .SPIPSA dipped 1.4% after S&P revised the country’s outlook to negative on weaker political consensus.
EM equity funds saw weekly net outflows of $2.41 billion, marking the 10th consecutive week of outflows, while $657 million left EM bond funds.
For the week, MSCI’s index for emerging markets equities .MSCIEF was down 2.7% and its broader EM currency index .MIEM00000CUS was little changed.
Key Latin American stock indexes and currencies at 1950 GMT:
Latest
Daily % change
MSCI Emerging Markets .MSCIEF
925.91
-0.53
MSCI LatAm .MILA00000PUS
2181.98
-0.5
Brazil Bovespa .BVSP
113139.37
-0.76
Mexico IPC .MXX
48236.70
-1.16
Chile IPSA .SPIPSA
5631.33
-1.44
Argentina MerVal .MERV
796800.60
4.282
Colombia COLCAP .COLCAP
1117.42
-0.73
Currencies
Latest
Daily % change
Brazil real BRBY
5.0337
-0.06
Mexico peso MXN=D2
18.2322
0.44
Chile peso CLP=CL
939.6
0.02
Colombia peso COP=
4224.5
1.16
Peru sol PEN=PE
3.8627
-0.16
Argentina peso (interbank) ARS=RASL
349.9500
0.01
Argentina peso (parallel) ARSB=
880
2.84
(Reporting by Johann M Cherian and Lisa Mattackal in Bengaluru; Editing by Richard Chang and Alistair Bell)
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