U.S. Markets closed

EMERGING MARKETS-Latam assets eye weekly losses; Brazil's real, stocks fall

Susan Mathew and Ambar Warrick

* MSCI Latam equity index to fall 6% for the week * Most regional stocks gain for the day * Regional currencies set for worst week in more than a month (Updates prices) By Susan Mathew and Ambar Warrick June 12 (Reuters) - Brazilian stocks and the real slid in catch-up trade on Friday, while most other Latin American currencies trended lower and were set for steep weekly losses as markets reassessed the prospect of a swift post-COVID 19 recovery. The MSCI's index of regional currencies fell 1.4% and was set for its worst week since late-April. The index of regional equities was on track for a 6% weekly loss. Latin American risk assets had come off three-month highs this week as a rally ran out of steam, with dour comments from the U.S. Federal Reserve exacerbating the sell-off on Thursday. "The impressive rally seen in recent weeks showed signs of strain after the widespread profit-taking seen this week," wrote Gustavo Rangel, Chief Economist, LATAM, at ING. "The correction may prove to be temporary, however, if signs of a recovery in economic activity consolidate and Covid-19 health indicators remain under control, as the reopening in business activities gains momentum." Returning from a day's holiday, the real slipped around 2.6%, while Sao Paulo-listed stocks were set for their worst day in six weeks. Most other regional bourses recovered as they tracked Wall Street higher, but concerns remained as Latam becomes the latest epicenter of the novel coronavirus outbreak. Brazil is the second worst hit worldwide in terms of number of cases while deaths in Mexico approached 16,000. Next week investors will be looking forward to a meeting of the Brazilian central bank, which is expected to cut rates further into record-low territory to support Latin America's largest economy. "In Brazil, the Monetary Policy Committee is facing a backdrop characterized by a sharp contraction of real activity and significant labor market deterioration, visibly below target inflation, and highly accommodative global monetary conditions. This backdrop supports additional rate easing," Goldman Sachs analysts wrote in a note. The Mexican peso rose more than 1.5% after the currency plummeted on Thursday as worries over a prolonged economic recovery were exacerbated by fears of a second wave of COVID-19 infections in the United States, hitting oil prices. Lockdowns to curb the virus have already hammered markets, with Mexico facing its steepest recession in decades while economic indicators in Brazil paint a dour picture. Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 984.90 -0.87 MSCI LatAm 1941.30 -2.68 Brazil Bovespa 91604.92 -3.25 Mexico IPC 37370.19 1.47 Chile IPSA 3976.31 0.81 Argentina MerVal 42831.46 -0.526 Colombia COLCAP 1150.19 2.55 Currencies Latest Daily % change Brazil real 5.0714 -2.63 Mexico peso 22.3780 1.60 Chile peso 793.5 -0.78 Colombia peso 3777.55 -0.38 Peru sol 3.4647 -0.17 Argentina peso 69.3700 -0.07 (interbank) (Reporting by Susan Mathew in Bengaluru; Editing by Alistair Bell and Grant McCool)