Latin American markets outperform world stocks struggling over US/China trade talks
Latin American stocks rose on Tuesday, outperforming world stocks that struggled to hold gains ahead of keenly awaited U.S.-Sino trade talks, earnings of top technology companies and an impending U.S. Federal Reserve decision on interest rates.
Brazil shares rose 0.2% buoyed by shares of state run firms after the country’s secretary of privatization said President Jair Bolsonaro’s government wants to sell at least US$ 20 billion in assets of state-owned companies this year.
While shares of power company Centrais Eletricas Brasileiras were the top performers, shares of oil firm Petrobras and lender Banco do Brasil were the biggest boosts to the benchmark Bovespa stock index.
Iron ore miner Vale SA rose 0.9%, recovering from Monday’s near 25% dive after a burst tailing dam left hundreds feared dead.
Regis Chinchila, an analyst at Terra Investimentos expects the Bovespa to hit 100,000 in February or March. The index closed Tuesday at 95,639.33.
In Argentina, locally listed shares of Brazil’s Petrobras were among the top gainers on the benchmark Merval index which stayed near all-time highs on broad-based gains. Other energy shares on the benchmark such as YPF rose thanks to higher oil prices.
Bourses in Mexico and Colombia also rose helping the MSCI index of Latin American shares reverse last session’s losses and rise 0.8%. Chilean shares fell, dragged down by consumer stocks.
Globally, sentiment remained cautious ahead of top level trade talks between China and United States set to begin on Wednesday amid heightened tensions between the two counties after U.S. officials announced criminal charges against Chinese telecom giant Huawei for violating U.S. sanctions against Iran.
Currencies of most Latin American economies firmed against a steady dollar as the greenback awaited results of the U.S. central bank meeting scheduled to end on Wednesday with investors expecting the Fed to show a more cautious stance.
“The stability of the exchange rate is due to the fact that market participants are waiting for several key events in the coming days,” analysts at Banco Base said pointing to the Fed meeting, trade talks and economic growth and jobs data from the United States as key events.
Brazil’s Real rose more than 1 percent to a two week high as the over 20% plunge in Vale on Monday attracted foreign investors, who sought to take advantage of its devaluation, said Ricardo Gomes da Silva Filho, an exchange trader at Correparti Corretora.
Oil prices helped currencies of next crude exporters Mexico and Colombia, while Chile’s peso tracked copper prices higher. Argentina’s currency, weakened more than 1%.