Latam markets rise on dovish Fed bets; Brazil's Bovespa at record high
Chile GDP slips in Q2
Brazil's main stock index hits record high
Mexican economy up 1.1% y/y in July
Colombian markets closed
Stocks index up 1.8%, FX up 1.1%
Updated at 1958 GMT
By Lisa Pauline Mattackal and Ankika Biswas
Aug 19 (Reuters) -Most Latin American assets tracked emerging market peers higher on Monday, with Brazil's main stock index hitting a record high, as growing hopes of stable economic growth and looser U.S. monetary policy lifted risk sentiment and weakened the dollar.
The dollar =USD weakened 0.6% against a basket of currencies to a seven-month low, lifting the MSCI Latin American currencies index .MILA00000CUS up 1.1% to its highest level since late July and the stocks gauge .MILA00000PUS nearly 2% higher.
MSCI's international emerging market currency index .MIEM00000CUS also hit a record high at the start of a week packed with central bank events.
After bouts of volatility, emerging market assets looked set to build on gains from the previous week as data pointing to U.S. economic growth soothed worries about slowing global demand.
Focus will now be on U.S. Fed Chair Jerome Powell's Friday speech in Jackson Hole, where investors anticipate he will make thecase for easing borrowing costs.
Chile's peso CLP= led Latam FX gains, up 1.6% against the dollar, with a rise in copper prices offsetting data that showed the country's gross domestic product (GDP) slipped in the second quarter.
Chile's Q2 GDP fell 0.6% on a quarterly basis, in line with forecasts and likely opening the door for more interest rate cuts this year.
Next in line, Brazil's real BRBY also gained over 1% against the dollar, while the country's main stock index .BVSP climbed 1.5% to hit a record high, boosted by miner Vale SA VALE3.SA and lender Banco Bradesco BBDC4.SA.
The country's monetary policy director Gabriel Galipolo said there is no guidance from policymakers for their upcoming interest rate-setting decision on Sept. 17-18, and that all options are on the table.
Economists now see Brazil's benchmark interest rate at the end of 2025 at 10% from the 9.75% previously expected, a weekly central bank survey showed. A growing number of forecasters now see the bank hiking rates at its September meeting.
"The (monetary policy committee) Copom has emphasized its data-dependent stance. And recent indicators suggest that monetary policy is not sufficiently restrictive," XP economists led by Caio Megale wrote in a note to clients.
The Mexican peso MXN=D2, however, lagged regional peers, losing 0.3%after rising for the past four trading sessions.
Preliminary estimates showed Mexico's economy likely grew 1.1% in July compared with the same month a year earlier, national statistics agency INEGI said, and the economy likely dropped 0.1% on a monthly basis.
A separate Reuters poll showed the country's year-on-year inflation likely eased in the first half of August, bolstering the case for another rate cut at its meeting next month.
On a year-to-date basis, all major Latin American currencies still remain down against the dollar with the greenback strengthening around 12%, 11%, and 4% respectively against the Mexican peso, Brazilian real and Colombian peso.
Local Colombian markets were closed for a holiday.
Key Latin American stock indexes and currencies at 1958 GMT:
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1104.76 | 1.02 |
MSCI LatAm .MILA00000PUS | 2359.57 | 1.89 |
Brazil Bovespa .BVSP | 135971.95 | 1.51 |
Mexico IPC .MXX | 54240.45 | 0.29 |
Chile IPSA .SPIPSA | 6465.26 | 0.94 |
Argentina Merval .MERV | 1644954.29 | -0.265 |
Colombia COLCAP .COLCAP | 1361.01 | 0.07 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.3913 | 1.53 |
Mexico peso MXN= | 18.6935 | -0.33 |
Chile peso CLP= | 923.06 | 1.58 |
Colombia peso COP= | 4028 | 0.07 |
Peru sol PEN= | 3.7322 | -0.34 |
Argentina peso (interbank) ARS=RASL | 943 | -0.106044539 |
Argentina peso (parallel) ARSB= | 1330 | 1.127819549 |
Emerging market currencies gain as dollar weakens https://reut.rs/3X8O82n
Reporting by Lisa Mattackal, Ankika Biswas and Marcela Ayres; Editing by Nick Zieminski and Aurora Ellis
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