Saturday, October 1

Growth slowdown fears pressure Latam assets


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Brazil’s real led losses among major

Latin American currencies as investors braced for a large US

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interest rate hike next week, while stocks declined more than 1%

on rising worries of a global economic slowdown.

Inflation in Brazil as measured by the IGP-10 price index

fell 0.90% in September, compared with a 0.69% drop

in August, firming the case for the central bank to end its

tightening cycle soon, as signaled.

Brazil’s real fell 0.5%, taking weekly losses

to 2.3% – its worst week since July.

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On the political front, presidential hopeful Luiz Inacio

Lula da Silva leads incumbent Jair Bolsonaro by 12 points, a

poll showed ahead of Brazil’s Oct. 2 vote.

“There is a growing consensus that we may see more upside in

commodity prices again, which will benefit Brazil, despite the

fact that the election theme poses a risk,” said Christian

Lawrence, senior cross-asset strategist at Rabobank.

Mexico’s offshore peso inched 0.3% higher in

holiday-thinned trade. Mexican stock markets were shut for the

Independence Day holiday. Colombia’s currency slipped

0.4%.

“Latam is where you can start anticipating the end of a

policy tightening cycle sooner than elsewhere, though the

correlation with the Federal Reserve is also very strong,” said

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Cristian Maggio, head of portfolio strategy and ESG at TD

Securities.

The dollar was flat, less than 1% away from its highest in

to decades, ahead of a potentially huge US Fed rate hike next

week.

Peru’s sol firmed 0.3%. Peru’s economy expanded 1.41%

in July compared with the year before, the government said,

feeling the effects of a slowdown in the key mining sector.

The July result brings year-on-year growth between January

and July to 3.22% in the world’s no. 2 copper producer.

Elsewhere, Argentina’s government budget for next year sees

the economy growing by a modest 2% with inflation dipping to a

still sky-high 60%, an official told reporters.

Brazil’s Bovespa fell 0.9%. Airline Gol Linhas

Aéreas Inteligentes SA fell 0.4% after US

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authorities said the carrier will pay more than $41 million to

resolve parallel bribery investigations.

Key Latin American stock indexes and currencies at 1849 GMT:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 944.21 -1.5

MSCI LatAm 2121.18 -0.94

Brazil Bovespa 108984.03 -0.88

Mexico IPC 46769.78 0.05

Chile IPSA 0.00 0

Argentina MerVal 145252.13 0.336

Colombia COLCAP 1192.68 -1.73

Currencies Latest Daily %

change

Brazil real 5.2661 -0.52

Mexico peso 20.0520 0.04

Chile peso 927.5 0.00

Colombia peso 4429.91 -0.39

Peru sol 3.8738 0.10

Argentina peso 143.5100 -0.22

(interbank)

(Reporting by Anisha Sircar and Amruta Khandekar in Bengaluru;

editing by Jonathan Oatis)

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