Sunday, January 29

Latam assets gain as higher commodity prices cushion BOJ blow


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Most Latin American currencies and

stocks rose on Tuesday as higher commodity prices helped them

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overcome the broader risk-off mood in the global financial

Markets after the Bank of Japan’s surprise policy shift.

Brazil led the advance, with its real up 1.7%

against a weaker dollar, while Sao Paulo’s Bovespa stock

index gained 2.1% to hit a one-week high.

Top Brazilian miner Vale rose 1.2%, while

state-owned oil giant Petrobras gained 0.2%.

Prices of oil, industrial and precious metals rose, lifting

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assets of most commodity-export oriented countries in Central

and South America.

The Brazilian Supreme Court on Monday granted an injury

allowing President-elect Luiz Inacio Lula da Silva to increase

social investment, while outlawing an opaque congressional

spending program.

The Mexican peso gained 0.3%, while Chile’s peso

and Peru’s sol added 0.4% each on higher copper

prices.

The MSCI’s index for Latin American stocks

gained 1.6%, against a 0.8% fall in the broader emerging markets

equity index.

Most Asian and European markets were left reeling after

Japan’s central bank widened the allowable band for long-term

yields to 50 basis points either side of its 0% target, from 25

basis points previously.

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The move stunned investors already worried about the

economic fallout of rising interest rates and surging inflation,

and was seen by many as a possible end to Japan’s ultra-loose

monetary policy.

“It’s important not to underestimate the impact this could

have, because tighter BoJ policy would remove one of the last

global anchors that have helped to keep borrowing costs at low

levels more broadly,” Deutsche Bank analyst Henry Allen said in

a client note.

Also weighing on global sentiment was a surge in coronavirus

infections in China, with many fearing a new wave of infections

could further hit corporate supply chains. Stocks in China ended

lower.

China kept benchmark lending interest rates unchanged for

the fourth consecutive month on tuesday, matching the forecasts

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of most market watchers who nevertheless expect further monetary

easing to prop up a slowing economy.

Among other emerging markets, Hungary’s forint

edged lower against the euro after the country’s central bank

left interest rates unchanged.

Key Latin American stock indexes and currencies at 1445 GMT:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 951.12 -0.68

MSCI LatAm 2126.31 2.64

Brazil Bovespa 106965.59 2.13

Mexico IPC 0.00 0

Chile IPSA 5252.85 0.88

Argentina MerVal 171310.90 1.388

ColombiaCOLCAP 1221.04 0.46

Currencies Latest Daily %

change

Brazil real 5.2170 1.74

Mexico peso 19.7220 0.35

Chile peso 889 -0.07

Colombia peso 4766.55 0.15

Peru sol 3.83 -0.03

Argentina peso (interbank) 173.9000 -0.16

Argentina peso (parallel) 322 0.93

(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Arun

Koyyur)

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