Market News

FX hurt by strong dollar; Latam stocks join global sell-off - REUTERS

SEPTEMBER 17, 2021

    * Political noise rattles Argentine markets 

    * Brazil inflation forecast raised sharply
    * Brazil's Log-In Logistica jumps on controlling stake bid 

 (Adds comments, updates prices throughout)
    By Susan Mathew and Shreyashi Sanyal
    Sept 16 (Reuters) - Emerging market currencies took a hit on
Thursday as surprisingly chipper U.S. retail sales data sent the
dollar rising, while stocks followed global markets into the red
on China woes. 
    Brazil's real led the charge in Latin America, losing
0.7%. The Economy Ministry sharply raised its forecasts for
inflation measured by the IPCA consumer price index to 7.9% this
year, from 5.9% previously.
    The central bank's hiking cycle to control inflation has
helped the currency from a spiral as the political backdrop
becomes cloudier going into 2022 elections.
    "The environment for the real is likely to remain difficult;
among other things, domestic factors such as President Jair
Bolsonaro's unsteady policies limit the real's appreciation
potential," said Alexandra Bechtel, an FX and EM analyst with
    Brazil's federal electoral court said it is set to probe the
funding of last week's rallies in support of Bolsonaro, who is
down in the polls as citizens grew disillusioned by his handling
of the pandemic which also threw up allegations of corruption.

    Political ructions rattled Argentine assets after Interior
Minister Eduardo de Pedro offered his resignation along with
several other hard-left officials, signaling a rift within the
ruling coalition after a bruising primary election loss.

    Argentine markets had welcomed a lead for the conservative
opposition in mid-terms primaries earlier this month.      
    Most other Latam currencies fell as the dollar was lifted
following upbeat U.S. retail sales data, but separate data
showed weekly jobless claims rose. All eyes are on the U.S. 
Federal Reserve's stance next week.
    EM stocks fell 1%, their worst session in four
weeks, tracking Wall Street and dented by worries over weak data
from China and Beijing's increasing crackdowns on businesses. 
    China is a major destination for Latam's basic material
    "Although EM equities have started to recover in the past
two weeks, we think it is too early to assume the market is
going to maintain a cyclical recovery," said Wouter Sturkenboom,
chief investment strategist, EMEA and APAC, at Northern Trust
Asset Management.
    "The risk associated with regulatory tightening in China is
still elevated, which translates to a higher required risk
    Brazil's Bovespa equity index dropped 1.1% extending
losses to a third straight session, weighed the most by miner
Vale as iron ore prices fell. 
    But Brazilian logistics company Log-In Logistica Intermodal
 soared 37% after Swiss shipping group MSC made an
unsolicited offer to buy a controlling stake of up to 67% in it.


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