EMERGING MARKETS-Argentina's assets slump after reform bill setback, Brazilian financials weigh on Latam stocks
* Argentina bond prices fall after reform bill setback * Mexican stocks touch fresh intraday high * Bradesco weighs on Bovespa after results * Mexico, Peru central banks meet on Thursday * EM debt, equity funds draw $35.7 bln foreign inflows in Jan * Latam FX down 0.2%, stocks down 0.6% (Updated at 2:45pm ET/1945 GMT) By Amruta Khandekar and Lisa Pauline Mattackal Feb 7 (Reuters) - Argentinian assets tumbled on Wednesday after President Javier Milei's economic reform package suffered a legislative setback overnight, while other Latin American markets trailed a rally in global stocks, pressured by uncertainty around path of U.S. interest rates. Argentinian legislators rejected several crucial proposals in Milei's landmark economic reform bill, casting doubt on the bill's future and rattling investors who hoped for changes to salvage the country's economy. Argentina's MerVal stocks index slumped over 5% in its worst day since mid-December, and the official peso closed slightly down at 830.20 per dollar. "The lack of Congress support (for Milei's package) suggests the administration should recalculate the political strategy ahead, opening up a more challenging period which could lead to increased volatility," said J.P. Morgan economist Diego Pereira in a note. The country's bonds slumped, with longer-dated maturities taking the brunt of the hit. Bonds maturing in 2035, 2038 and 2041 all dropped 0.9 cents while the 2046 bond fell 1.15 cents to trade at 34.55 cents on the dollar, data from MarketAxess showed. Broader Latin American currencies slipped 0.2%, while stocks failed to benefit from a broader rally in global shares, slipping 0.6% as Brazilian financial shares and weighed down the index. Latam assets have had a rough start to 2024 after pushback from U.S. policymakers dampened bets of rate cuts early this year, even while many central banks in Latin America are easing policy. Heavyweight Brazilian stocks fell 0.5%, as lender Bradesco slumped nearly 16% to the bottom of the index after reporting quarterly results. Mexico's benchmark stock index slipped after touching an all-time intraday high of 59,020.55 points, down 0.2% on the day. The Mexican peso dipped 0.2%, while the Peruvian sol weakened to 3.8664 per dollar. Interest rate decisions from both countries are expected on Thursday. Mexico's central bank is expected to hold rates, while Peru is likely to cut rates for a sixth time. U.S.-listed shares of Argentinian companies slipped, while Global X MSCI Argentina ETF slid 2.6% to an over two-week low. Brazil's real was flat. Brazil's central bank chief Roberto Campos Neto expressed optimism regarding economic growth in 2024. Chile's peso dropped 0.8%. Emerging market fixed income and equities saw $35.7 billion of foreign inflows in January, data from the Institute of International Finance showed. However, China's equities saw $3.2 billion in outflows and its debt shed $4.7 billion, as investors remain concerned about the stability of the country's economy and markets. Key Latin American stock indexes and currencies at 1945 GMT: Latest Daily % change MSCI Emerging Markets 1002.20 0.23 MSCI LatAm 2571.37 -0.68 Brazil Bovespa 129758.17 -0.5 Mexico IPC 58549.06 -0.22 Chile IPSA 6010.29 0.13 Argentina MerVal 1154073.25 -5.066 Colombia COLCAP 1278.33 0.12 Currencies Latest Daily % change Brazil real 4.9688 -0.15 Mexico peso 17.0690 -0.22 Chile peso 953.9 -0.79 Colombia peso 3950.71 0.07 Peru sol 3.8308 0.50 Argentina peso 830.1000 -0.06 (interbank) Argentina peso 1150 -0.43 (parallel) (Reporting by Amruta Khandekar and Lisa Mattackal, editing by David Ljunggren and Nick Zieminski)
