EMERGING MARKETS-Latam markets steady as softer dollar, Treasury yields offer relief
By Ragini Mathur and Sudeshna Ghoshal
Oct 15 (Reuters) - Latin American stocks and currencies steadied on Thursday after a broad selloff in the previous session, as a retreat in the US dollar and Treasury yields offered some relief to risk-sensitive assets.
MSCI's index of Latin American stocks <.MILA00000PUS> rose 0.5%, while its regional currency index <.MILA00000CUS> added 0.2%.
Wednesday's market decline came after hotter-than-expected US consumer inflation data for September, which fueled expectations that the Federal Reserve could raise interest rates as soon as this month.
The dollar eased from an 18-month peak as Treasury yields declined, helping temper pressure on emerging-market assets.
Earlier in the day, a sharp selloff in high-flying AI-related companies weighed on sentiment globally. Commodity-heavy Latin American markets, however, were relatively more resilient than technology-led global benchmarks.
Thierry Wizman, global FX & rates strategist at Macquarie Group, said that, despite this week's hot US inflation data, investors were increasingly focused on the outlook for AI spending.
"Yesterday's action revealed exactly what could threaten the USD and bring US yields lower in the next few months and in 2027: a reduction in the outlook for AI investment. That's because it would reduce bond supply and impair US growth, all else equal," Wizman added.
BRAZILIAN ASSETS CAUTIOUS BEFORE RUNOFF
In regional markets, Brazil's Bovespa .BVSP was on track to end lower for a third straight session, falling 0.1%, while the real was down 0.3%.
Markets remained watchful of political developments ahead of the October 25 presidential runoff, after a Quaest poll showed Senator Flavio Bolsonaro with 46% support against 44% for President Luiz Inacio Lula da Silva, leaving the candidates about even within the survey's two-percentage-point margin of error.
The uncertainty around the election kept investors cautious about the policy outlook and the shape of the next government.
Bolsonaro has also secured backing from multiple parties ahead of the runoff, offering an early indication of a possible governing coalition should he win.
Brazil's Senate on Wednesday approved a constitutional amendment reducing the workweek to five days from six, handing Lula a legislative win.
Meanwhile, data showed retail sales rose less than expected in August, underscoring the drag from high interest rates on consumer demand.
Elsewhere, Mexico's benchmark stock index .MXX gained 1%, while the peso was 0.2% up.
Chilean stocks .MMXIPSAGC were little changed and the peso was up 0.2% even as prices of copper, the country's key export, fell to their weakest level in 10 days. MET/L
Key Latin American stock indexes and currencies at 1519 GMT:
Stock indexes | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1609.32 | -3 |
MSCI LatAm .MILA00000PUS | 3329.11 | 0.45 |
Brazil Bovespa .BVSP | 206279.25 | -0.11 |
Mexico IPC .MXX | 67439.85 | 0.97 |
Chile IPSA .MMXIPSAGC | 10,972.51 | 0.06% |
Argentina MerVal .MERV | 2830363.26 | -0.19 |
Colombia COLCAP .COLCAP | 2591.01 | 0.34 |
Currencies | Latest | Daily % change |
Brazil real | 5.0409 | -0.27 |
Mexico peso | 18.452 | 0.15 |
Chile peso | 982.2 | 0.18 |
Colombia peso | 3166.55 | 0.16 |
Peru sol | 3.427 | 0.04 |
Argentina peso (interbank) | 1,511.5 | 0.13 |
Argentina peso (parallel) | 1,525.0 | 1.61 |