Latam stocks and currencies fall
A weaker dollar helped limit the decline in Latin American currencies on Thursday, while shares trimmed losses as Wall Street ended off session lows amid worries about slowing global growth, trade, and falling oil prices.
Sentiment was hit by the arrest of Chinese tech giant Huawei’s chief financial officer at the request of the United States as it cast doubts on the prospect of a trade deal between Beijing and Washington in their 90-day truce period.
This comes as signs that the U.S. economy may be slowing spooked investors. U.S. Treasury yields tumbled and traders scaled back expectations on the number of rate hikes by the Federal Reserve amid weak economic data and heightened market volatility.
“Almost all emerging markets are fearful of continued troubles from a trade standpoint and they’re fearful that the U.S. markets are signaling a bigger slowdown globally,” said Robert Lutts, president and chief investment officer at Cabot Wealth Management Inc.
“The thought process among many investors is that this is the beginning of the unraveling of the growth phase that we’d been seeing,” he said, adding that sliding oil prices also added to the day’s move lower.
The MSCI index of Latin American stocks fell, but closed nowhere close to losses logged earlier in the day as they took cues from U.S. stocks, which erased some losses towards the close of trading.
The Argentine and Mexican shares turned positive, while Brazil’s main equity index finished 0.2 percent lower, recovering from a more than 2 percent drop in the session.
The index was driven lower by shares of oil firm Petrobras that slid on lower oil prices. Planemaker Embraer fell after a Brazilian federal court granted an injunction blocking its proposed tie-up with Boeing Co.
Among Latin American currencies, the Mexican peso reversed a more than five-month low hit earlier in the session, and rose 0.8 percent as the dollar dropped.
Most other regional currencies lost, albeit off the day’s lows. The Brazilian real lost 0.3 percent and extended losses for a third straight session, while the Colombian peso broke a five-day winning streak and was down nearly 1 percent.