EMERGING MARKETS-LatAm stocks and currencies fall as weaker commodity prices, risk-off mood weigh

By Reuters News
People sit in front of an electronic board displaying information on recent fluctuations of market indices at the B3 Stock Exchange, in Sao Paulo, Brazil, October 5, 2026. REUTERS/Alexandre Meneghini

By Ragini Mathur and Niket Nishant

- Most Latin American stocks and currencies fell on Thursday as souring appetite for risk and weaker commodity prices pressured the region's assets, while investors assessed economic data across key markets.

MSCI's indexes tracking Latin American equities .MILA00000PUS and currencies .MILA00000CUS were down 0.9% and 0.5%, respectively, building on steep losses earlier this week after Brazilian President Luiz Inacio Lula da Silva's re-election.

Markets had largely expected his right-wing opponent, Senator Flavio Bolsonaro, to prevail, betting his administration would pursue stronger fiscal consolidation.

Those expectations had boosted Brazilian assets ahead of the vote, but the gains unwound sharply after Lula's victory.

Bolsonaro declared himself Brazil's rightful leader on Wednesday after arriving in the US, alleging he was the victim of an electoral coup.

Data showed Brazil's interest bill rose to 8.99% of gross domestic product in the 12 months through September, a level not seen since January 2016, when the country was mired in a deep economic recession.

Brazilian stocks .BVSP fell 0.6%, while the real weakened 0.8%, extending losses since the election result to nearly 17% and 8.4%, respectively.

"We think that it's a bit excessive in terms of correction. The question is whether policy remains more fiscally disciplined," said Luca Bindelli, head of investment strategy at Lombard Odier.

"There are a couple of reasons to be more reassured. One is that the election is over, so that reduces the incentive for pre-election fiscal support or discussions. And then Congress will be more right-leaning and will itself act as more of a fiscal constraint."

Brazil Treasury Secretary Daniel Leal said on the day that the debt market has become more stable following aggressive bond buyback operations launched after Lula's re-election triggered a sharp increase in the risk premium demanded by investors.

"The ability to reduce borrowing costs and stabilize debt will depend less on political orientation than on governments' capacity to deliver credible fiscal improvements and stronger economic growth," said Joan Domene, chief LatAm economist at Oxford Economics.

A cooling in enthusiasm around the AI trade also dampened global risk sentiment.

Elsewhere, Chile's unemployment rate rose to its highest level in more than five years in the quarter through September.

Chilean stocks .MMXIPSAGC dropped over 1%, while the peso slipped 0.4% as copper prices fell. Investors remained cautious over demand from the artificial intelligence sector and high US inventories of the metal, Chile's main export. MET/L

In Peru, where gold is a key export, the sol weakened 0.4% as bullion prices fell over 1%. Data showing elevated US inflation reinforced expectations that the Federal Reserve could raise interest rates later this year, reducing the appeal of non-yielding gold. GOL/

Commodity-focused Latin American markets were also under pressure because of falling oil prices. GOL/

Mexico's peso fell 1.2%, while stocks .MXX were up 0.6%. Investors awaited signs of progress in trade talks with the US after President Claudia Sheinbaum said on Wednesday that both sides were assessing whether an agreement could be reached before the US midterm elections.


Key Latin American stock indexes and currencies:

Stock indexes

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

1592.17

-0.97

MSCI LatAm .MILA00000PUS

2846.57

-0.93

Brazil Bovespa .BVSP

170046.92

-0.56

Mexico IPC .MXX

69571.62

0.56

Chile IPSA .MMXIPSAGC

10545.26

-1.24

Colombia COLCAP .COLCAP

2484.21

-0.86

Currencies

Latest

Daily % change

Brazil real

5.3942

-0.83

Mexico peso

18.8526

-1.23

Chile peso

990.32

-0.39

Colombia peso

3165.5

-0.17

Peru sol

3.455

-0.35

Argentina peso (interbank)

1,538

0.26

Argentina peso (parallel)

1,545

1.29

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