EMERGING MARKETS-Argentine bonds rally on debt deal; Brazils real outperforms Latam FX – Reuters

EMERGING MARKETS-Argentine bonds rally on debt deal; Brazils real outperforms Latam FX – Reuters
    * Argentine stocks reverse course after strong surge
    * Near-term rally an opportunity to pare back on Arg
    * Brazil's largest lender Itau Unibanco falls after weak
    * Ecopetrol rises on narrowly avoiding loss in Q2

 (Updates prices)
    By Ambar Warrick and Susan Mathew
    Aug 4 (Reuters) - Brazil's real firmed on Tuesday, cheered
by a rise in industrial output, while Argentine bonds rose after
the country struck a deal to restructure $65 billion in
sovereign debt.
    After multiple deadline extensions, Argentina said it had
reached a deal with three creditor groups, which potentially
could help it climb out of a damaging default and revive the
recession-hit economy. The country had slipped into its ninth
sovereign default in May this year.
    Argentina's Merval stock index, which had jumped
6.6% on Monday and almost 7% this session to scale a record
high, reversed course to trade 0.7% lower. The peso
slipped marginally to hit new lows, while traders said 
Argentina's over the counter bonds closed an average
8.7% higher. 
    "With the removal of this uncertainty and potential
engagement with the International Monetary Fund, we think
further upside is likely (for Argentine bonds) in the coming
weeks," said Citigroup FX strategists.
    However, "this near term rally (in local assets) would be an
opportunity for investors to pare back on their peso positions,
which have rallied meaningfully since April on the back of local
exchanges, more regulatory changes, and a more favorable
external environment," they said. 
    Brazil's real outperformed peers, up 0.3%. Data
showed that industrial output in the country marked its
second-biggest increase ever in June, as the sector continued to
claw back from disruptions caused by the pandemic.
    On Wednesday, the central bank is expected to cut interest
rates to a record low 2% as it continues to try and mitigate the
impact of the coronavirus.
    The Mexican peso was at three week lows against a
weaker dollar, and Colombia's currency lost 0.5%, but
both traded well off session lows as oil prices recovered on
U.S. stimulus hopes.
    Among stocks, Brazil's Bovespa stock index extended
losses to a fourth straight session, pulled down by heavyweight
lender Itau Unibanco Holding, after its quarterly
profit plunged 40%.
    Colombian oil major Ecopetrol rose almost 3% after
it narrowly avoided a second-quarter loss expected by analysts.
It reported a 99% decline in net profit due to the fall in
global oil prices, and said it would invest up to $13 billion
over the next three years. 
    Chilean stocks rose 0.1%. The country's central bank is
likely to stay pat on its benchmark interest rate, through at
least the next 12 months, a central bank poll of traders showed
on Tuesday.
    Key Latin American stock indexes and currencies at 1943 GMT:
  Stock indexes           Latest   Daily %
 MSCI Emerging Markets    1089.86     1.11
 MSCI LatAm               2006.28    -0.93
 Brazil Bovespa         101058.88    -1.72
 Mexico IPC              37522.50    -0.06
 Chile IPSA               3950.75     0.11
 Argentina MerVal        52132.51   -0.708
 Colombia COLCAP          1129.40    -0.33
      Currencies          Latest   Daily %
 Brazil real               5.2975     0.28
 Mexico peso              22.7470    -0.54
 Chile peso                 771.2    -1.84
 Colombia peso            3779.45    -0.52
 Peru sol                  3.5508    -0.28
 Argentina peso           72.5600    -0.06
 (Reporting by Ambar Warrick in Bengaluru; Editing by Sandra
Maler and Marguerita Choy)

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