Latam stocks, FX index hover around multiyear highs as rate-cut bets persist

EMERGING MARKETS-Latam stocks, FX index hover around multiyear highs as rate-cut bets persist

Updated at 3pm ET/2000 GMT

By Siddarth S and Lisa Pauline Mattackal

Dec 27 (Reuters) –Latin American currencies and stocks were steady on Wednesday, with indexes of both markets hovering around multiyear highs as bets on U.S. rate cuts pressured the U.S. dollar, while positive China data further boosted commodity-heavy regional markets.

A basket of regional currencies .MILA00000CUS rose 0.2%, briefly touching its highest level since 2011 as the U.S. dollar =USD traded around five-month lows.

The MSCI index tracking Latin American stocks .MILA00000PUS jumped 0.2%, trading around its highest level since April 2022, as investors continued to bet that major central banks such as the Federal Reserve will cut interest rates early next year.

That rise was in tandem with global stocks, which rallied to their highest level in over a year. MKTS/GLOB

“The rally in equity markets in the closing weeks of 2023 suggests that investors will be looking past the slower economies in the coming months, the extent to which expected gains later in 2024 have already been priced in the markets is unclear,” William Witherell, chief global economist at Cumberland Advisors, wrote in a note.

Emerging market assets globally continued to rise, with MSCI’s emerging market currency index .MIEM00000CUS at its highest level since April 2022, on track for its best year since 2017 with yearly gains of over 4%.

Latam assets are gearing up for a robust end to the year as investors’ appetite for risk was strengthened by the U.S. Federal Reserve’s dovish stance and a softer inflation report last week.

Base metals prices rose in London, buoyed by industrial profit gains in top metals consumer China.

The peso in Chile CLP=, the world’s top copper producer, advanced 0.8%, while the Mexican peso MXN= rose 0.3%.

Mining investments in Chile are expected to hit $65.71 billion in the 2023-2032 period, the country’s copper commission, Cochilco, said.

Brazil’s Bovespa index .BVSP hit a fresh intraday high for the second consecutive session, jumping to 134,193 points, while the real BRL= edged down 0.4% ahead of inflation data on Thursday.

Goldman Sachs said it expected Brazil’s IPCA-15 inflation print to come in at 0.30% in December compared with 0.33% in the November IPCA-15 and 0.28% for the full month of November.

Shares of Brazil’s Petrobras PETR4.SA were down 0.2% after the state-run oil company said it will reduce diesel prices at its refineries by an average of 8%.

Shares of Brazilian airlines Azul AZUL4.SA and Gol GOLL4.SA rose 1.4% and 0.1% after the companies announced they had secured access to around $200 million each in financing to fund engine maintenance plans.

Among regional bourses, Colombia’s Colcap index .COLCAP inched up 0.6%, while Chilean shares .SPIPSA slipped 0.3%.

Key Latin American stock indexes and currencies at 2000 GMT:

	Latest	Daily % change
MSCI Emerging Markets .MSCIEF	1009.77	1.13
MSCI LatAm .MILA00000PUS	2671.94	0.24
Brazil Bovespa .BVSP	133942.94	0.31
Mexico IPC .MXX	57657.93	-0.15
Chile IPSA .SPIPSA	6201.66	-0.26
Argentina MerVal .MERV	865639.84	-5.2
Colombia COLCAP .COLCAP	1190.35	0.55
Currencies	Latest	Daily % change
Brazil real BRBY	4.8311	0.00
Mexico peso MXN=D2	16.9190	0.33
Chile peso CLP=CL	882.4	0.78
Colombia peso COP=	3822.26	0.78
Peru sol PEN=PE	3.6925	-0.21
Argentina peso (interbank) ARS=RASL	807.4000	-0.06
Argentina peso (parallel) ARSB=	980	1.53

Reporting by Siddarth S and Lisa Mattackal in Bengaluru
Editing by Sharon Singleton and Matthew Lewis