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EMERGING MARKETS-Latam stocks slip on economic worries,…

By Shreyashi Sanyal July 24 – Most Latin American stocks fell on Friday, as economic worries exacerbated by the coronavirus pandemic and worsening relations between the United States and China kept investors away from riskier assets. In a like-for-like move, China ordered the United States to close its consulate in the city of Chengdu, responding to a U.S. demand this week that China close its Houston consulate. “Risk appetite is running out of steam as virus worries persist, and as it seems impossible to be constructive on China or the U.S.,” said Edward Moya, senior market analyst at OANDA. The move reverberated through markets across the world, with Wall Street also opening weaker and its losses spilling over to regional equity indexes. Sao Paulo stocks slipped 0.7%, while Mexican stocks fell 0.8%. Brazil’s real slipped against the dollar for the second straight session as more bets for an interest rate cut were spurred by mid-July inflation data that undershot the consensus forecast. Inflation in Brazil rose in July at its fastest pace in six months thanks to rising transport and fuel costs, but at a far slower rate than economists had expected. In Mexico, data showed its economy shrank another 2.6% in May from April after a record decline the previous month, dimming the chances of a sharp rebound in activity from the destruction of the coronavirus pandemic. The Mexican peso made small gains against a weakening dollar and as the oil exporter’s currency was also supported by higher crude prices. “Although the economy will probably start to improve in the second half of the year given the easing of restrictions in some states, a slow and complex recovery is expected due to a severe drop in investment spending,” analysts wrote in a UBS client note. The Chilean peso rose as President Sebastian Pinera on Thursday bowed to intense public pressure and agreed to sign into law a controversial bill allowing citizens to draw down 10% of their pensions early amid the coronavirus pandemic. Argentina’s 1.7 trillion pesos ($23.7 billion) of short-term ‘Leliq’ notes have helped mop up liquidity in the market and hold back rising prices, leaving the central bank with a tricky task to rein in the debt without reigniting inflation. Bolivia’s general election will be pushed back until Oct. 18 due to the coronavirus pandemic, which could fan tensions between the interim conservative government and the socialist party of former President Evo Morales. Key Latin American stock indexes and currencies; Stock indexes Latest Daily % change MSCI Emerging Markets 1058.87 -1.74 MSCI LatAm 2054.58 -0.63 Brazil Bovespa 102212.07 -0.69 Mexico IPC 37138.70 -0.79 Chile IPSA 3970.92 -0.34 Argentina MerVal 48237.78 -0.352 Colombia COLCAP 1175.54 -0.53 Currencies Latest Daily % change Brazil real 5.2012 -0.23 Mexico peso 22.3990 0.40 Chile peso 765.3 0.63 Colombia peso 3686.1 -0.69 Peru sol 3.5327 -0.42 Argentina peso (interbank) 71.8900 -0.07 Argentina peso (parallel) 132 3.03 (Reporting by Shreyashi Sanyal in Bengaluru)

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