Brazilian real, stocks lead gains among Latin American peers
- Latam stocks up 2.5%, FX gains 1.3%
- Brazil stocks set to rally 13% by end-2023 - poll
- Chile unemployment rate hits 8.0% in quarter through October
Brazil's resource-heavy main stock index and real led gains among Latin American peers on Tuesday, on boost from a subdued dollar and as prices of their exporting commodities rose on hopes of easing COVID-19 curbs in China post the rare protests.
The MSCI's index for Latin American stocks (.MILA00000PUS) and currencies (.MILA00000CUS) jumped 2.5% and 1.3%, respectively.
The real USDBRL rallied 1.5% as prices of its top export iron ore jumped on top steel producer China's moves to ramp up support for struggling property developers.
The Bovespa has risen 6.5% so far this year, outperforming the 22.6% drop in the broader emerging market EEFS.
"The case for Brazil outperformance is still intact, but that near-term volatility should be expected," wrote Lawrence Brainard, chief emerging markets economist at TS Lombard in a note, adding that markets have misread Lula's policy priorities and strategy.
"While the extent to which Lula will be successful in pushing through major economic reform is not yet clear, there is widespread support from business and the broader public for addressing the festering fiscal mess."
Reuters reported Brazilian President-elect Luiz Inacio Lula da Silva is expected to tap former Sao Paulo Mayor in coming days to be his finance minister.
Lula's silence on the decision has rattled Brazilian markets this month, with investors also worrying about Lula aiming to prioritize social spending over fiscal responsibility that could ultimately force a monetary policy shift.
Emerging market central banks, especially Brazil, had started tightening their monetary policies way ahead of their developed peers. Still, inflation continues to run ahead of their target expectations.
Meanwhile, sales of Argentina's 2021/22 hit a two-month high after the government instated a preferential exchange rate for soy exports.
Key Latin American stock indexes and currencies at 1929 GMT:
Daily % change
MSCI Emerging Markets EEFS
MSCI LatAm (.MILA00000PUS)
Brazil Bovespa IBOV
Mexico IPC ME
Chile IPSA SP_IPSA
Argentina MerVal IMV
Colombia COLCAP (.COLCAP)
Daily % change
Brazil real (BRBY)
Mexico peso USDMXN
Chile peso USDCLP
Colombia peso USDCOP
Peru sol USDPEN
Argentina peso (interbank) USDARS
Argentina peso (parallel) (ARSB=)