EMERGING MARKETS-Latam stocks dip on trade woes; Brazil FX firms on strong Q3 GDP

By Ambar Warrick and Susan Mathew

Dec 3 (Reuters) Latin American stock markets fell on Tuesday, with Mexican shares touching a two-month low, as comments by U.S. President Donald Trump sparked fears of a delay in resolving the Sino-U.S. trade war.

Global equities dropped after Trump said a trade deal with China might be delayed until after the November 2020 U.S. presidential election. Possible U.S. duties on French goods also kept markets on edge. MKTS/GLOB

Investors had earlier expected an interim trade deal between Washington and Beijing by mid-November, but the prospect of a delayed conclusion now opens the door to a further escalation in the tensions that have dogged risk assets for more than a year.

Tuesday’s comments come after Trump restored metal tariffs on Brazil and Argentina on Monday, taking officials there by surprise.

Argentina and Brazil plan to meet this week to discuss the tariffs and are expected to meet members of the Mercosur trade bloc on Wednesday.

An index of Latin American stocks .MILA00000PUS snapped a four-day winning run and was down 0.2%. Shares in Colombia .COLCAP, Brazil .BVSP, Mexico .MXX and Chile gave up between 0.8% and 0.1%, while Argentine equities .MERV lost 2.3%.

“Trade headlines are certainly making for cautious trade in markets … the mood has certainly become less positive,” said William Jackson, chief emerging markets economist at Capital Economics.

Regional currencies fared slightly better, with an index of local units .MILA00000CUS rising about 0.2% as the dollar held declines following disappointing manufacturing data from the United States on Monday. USD/

Brazil’s real BRL= firmed 0.3% after data showed the country’s economy expanded faster than expected in the third quarter.

Upward revisions to GDP figures for the first two quarters this year also meant that Latin America’s largest economy steered further clear of recession than previously thought.

Latam is poised for growth after years of underperformance, Luiz Ribeiro, manager of the Latin America Equities fund at asset manager DWS Group, told the Reuters Global Markets Forum on Tuesday, forecasting regional growth would rebound in 2020 to near 2%.

Mexico’s peso MXN= traded flat amid a push back by the Mexican government against U.S. attempts to subject Mexico to oversight of its labor market.

President Andres Manuel Lopez Obrador said the Mexican Senate should be consulted before changes to a new North American trade deal are signed off.

Key Latin American stock indexes and currencies at 1930 GMT:

Stock indexes

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

1036.23

-0.38

MSCI LatAm .MILA00000PUS

2658.21

-0.18

Brazil Bovespa .BVSP

108812.52

-0.11

Mexico IPC .MXX

42377.26

-0.39

Chile IPSA .SPIPSA

4491.53

-0.22

Argentina MerVal .MERV

32691.67

-2.258

Colombia COLCAP .COLCAP

1586.14

-0.76

Currencies

Latest

Daily % change

Brazil real BRBY

4.2078

0.13

Mexico peso MXN=D2

19.5790

-0.01

Chile peso CLP=CL

802.6

0.07

Colombia peso COP=

3500.4

0.07

Peru sol PEN=PE

3.389

0.06

Argentina peso (interbank) ARS=RASL

59.9100

0.10

(Additional reporting by Lisa Pauline Mattackal and Aaron Saldanha ion Bengaluru; Editing by Giles Elgood)

((susan.mathew@thomsonreuters.com; +91-80-6749-1130;))

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