* Morgan Stanley, BlackRock bullish on EM
* Latam stocks come off two-month high
* Mexican peso breaks six-day winning streak
By Ambar Warrick and Susan Mathew
April 20 (Reuters) - Most Latin American currencies fell on
Tuesday as the dollar strengthened off lows, with falling oil
prices knocking currencies of Colombia and Mexico.
Chile's peso, meanwhile, rose 0.5% to a more than
three-month high. Copper prices retreated, but stayed near
10-year highs on optimism over recovering global demand.
World no. 2 copper exporter Peru's sol, however, gave
up session gains to trade 0.6% lower as concerns about the
presidential election remained.
It extended losses after posting its worst session in more
than five months on Monday when the first opinion poll ahead of
a presidential run-off election in June indicated a win for
socialist candidate Pedro Castillo.
Stocks in Peru sank 5% to touch their lowest
As oil prices fell on demand worries, Colombia's peso
lost 0.5%. Mexico's peso dropped 0.7% after six straight
days of gains which took it to three-month highs. Analysts say
the currency has prime conditions for carry trades, along with
EM peer South Africa's rand.
Sentiment towards emerging market assets, however has been
improving, with major investment bank Morgan Stanley
going bullish on currencies and bonds, citing stability in U.S.
yields. BlackRock, the world's largest asset manager, espoused a
similar stance on Monday.
But, Latam markets have lagged their peers due to a damaging
COVID-19 resurgence in the region.
Brazil's real erased the day's gains, falling 0.1%.
Amid fiscal worries, the 2021 budget was sent to President Jair
Bolsonaro for approval after an initial delay.
The rapid spread of COVID-19 in the country has dulled its
economic outlook, with the government ramping up spending to
what has been perceived as unsustainable levels to offset the
pandemic's economic impact.
"The gradual economic recovery continued in February, but
the resurgence of the pandemic in March has reversed that
trend," analysts at TS Lombard wrote in a note.
"Activity data for retail sales and the services sector
showed some resiliency in February, but there is little doubt
that this trend was reversed by the virus resurgence in March."
They also expect the Brazilian central bank to hike interest
rates steeply in the first half of the year - a move which could
support the real.
In line with global stocks, Latin American equities
retreated, with the MSCI's index of regional stocks
coming off a two-month high.
Key Latin American stock indexes and currencies:
Stock indexes Latest Daily %
MSCI Emerging Markets 1344.90 -0.27
MSCI LatAm 2392.59 -0.75
Brazil Bovespa 119999.62 -0.77
Mexico IPC 48517.68 0.93
Chile IPSA 4925.06 -0.91
Argentina MerVal 46800.75 -2.552
Colombia COLCAP 1305.93 -0.51
Currencies Latest Daily %
Brazil real 5.5581 -0.09
Mexico peso 19.9540 -0.71
Chile peso 696.8 0.52
Colombia peso 3641.5 -0.44
Peru sol 3.6897 -0.49
Argentina peso 92.9700 -0.04
(Reporting by Ambar Warrick in Bengaluru; editing by Jonathan
Oatis and Cynthia Osterman)
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