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Views Article – Sharenet Wealth

Forex, News

Brazilian stocks fall as fiscal woes cloud earnings

By Agamoni Ghosh July 25 (Reuters) – Brazil’s Bovespa pulled Latin American shares lower on Thursday after data showed the region’s largest economy posted its biggest fiscal shortfall since January, but robust earnings from beer-maker Ambev helped contain further losses. MSCI’s index of Latin American stocks fell 1%, with heavyweight indexes in Brazil and Mexico shedding about 0.7% each. Latest data showed Brazil posted a current account deficit of $2.9 billion in June, the biggest shortfall since January and almost twice as wide as the $1.5 billion deficit median forecast in a Reuters poll. Brazil’s economy is struggling to emerge from a crippling recession, with the government focused on passing through Congress a pension overhaul that it hopes will prop up public finances and kick-start growth. Shares of Brazilian brewer Ambev, rose 8% after the company posted better-than-expected quarterly results, while Bradesco sagged despite a 25% rise in recurring profit. Adding to the dour mood, European Central Bank Chief Mario Draghi reiterated concerns about slowing global growth and all but pledged future interest rate cuts. The ECB held rates steady on Thursday. Emerging market currencies, which typically gain on bets of interest rate cuts from developed world central banks, fell. MSCI’s index for Latin American currencies shed 0.5%. The overall global data is just turning out to be quite negative and it seems the relief for EM currencies that came on the back of the Fed possibly lowering rates is starting to turn around, said Christian Lawrence, senior strategist, Latam FX, Rabobank. The Mexican peso outperformed as oil prices moved higher, while stocks dropped, weighed down by Cemex , which slid nearly 4% after it posted downbeat earnings that were hurt by lower volumes amid trade conflicts. Chile’s peso fell 0.4%, tracking a dip in the price of copper, the country’s top export. The peso has shed nearly 12% as the protracted trade war between the United States and China has taken its toll on copper prices. “Chile is increasingly becoming a proxy for the trade war in this region because of that copper link,” Lawrence said. Key Latin American stock indexes and currencies at 1505 GMT Stock indexes daily % Latest change MSCI Emerging Markets 1055.01 -0.03 MSCI LatAm 2875.19 -0.88 Brazil Bovespa 103430.80 -0.66 Mexico IPC 40948.98 -0.53 Chile IPSA 4975.13 0.12 Argentina MerVal 39825.29 0.1 Colombia IGBC 12925.29 0.08 Currencies daily % Latest change Brazil real 3.7820 -0.35 Mexico peso 19.0277 0.12 Chile peso 694 -0.55 Colombia peso 3207.35 -0.28 Peru sol 3.296 -0.06 Argentina peso 43.1300 -0.53 (interbank) (Reporting by Agamoni Ghosh in Bengaluru Editing by Paul Simao)


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