Brazil Stocks Slump 2%

Brazil's benchmark Bovespa stock index tumbled more than 2% to close at 109,349 on Monday, as all eyes turn to political developments in Brazil, as well as a key central bank meeting later this week.

On the political front, traders awaited further clarity on the make-up of Brazilian president-elect Lula da Silva's Cabinet, especially the economy minister and likely fiscal policies.

Meanwhile, Brazil's central bank is seen holding its Selic basic interest rate at 13.75% until September next year, before cutting it to 11.50% by year-end 2023.

The central bank’s “Focus survey” showed financial markets raised projections for inflation and GDP growth in both 2022 and 2023.

On the economic data front, a fresh PMI survey showed Brazil's private sector shrank for the first time since May 2021 in November, mainly dragged down by manufacturing.

Elsewhere, stronger-than-expected US services industry activity data added to fears of a hawkish Federal Reserve.