April 25 (Reuters) - The Mexican peso led losses among Latin American currencies on Thursday, after hotter-than-expected U.S. inflation data reignited concerns that the Federal Reserve would delay cutting interest rates.
- US economic growth slows in first quarter; inflation surges
- Lower iron, nickel and copper prices weigh on Vale’s earnings
- Cement maker Cemex’s Q1 profit climbs despite dip in volumes
- Latam FX off 0.4%, stocks down 0.5%
The MSCI index for Latin American currencies slid 0.4% by 1500 GMT.
The peso weakened 1.1% against the dollar on the news of sticky U.S. inflation.
“What seems to be now causing some havoc across markets is the thought that we may witness a cycle of ‘stagflation’ in the U.S., a time when the economy stagnates while prices remain elevated without reprieve,” said Juan Perez, director of trading at Monex. “LATAM odds of exercising loose monetary policy and stay stimulative are basically cemented.”
Other Latin American currencies such as the Brazilian real and Colombia’s peso shed 0.5% and 0.7%, respectively, against the greenback.
Bucking regional weakness, top copper producer Chile’s peso rose 0.2%, tracking firm prices of the metal as funds chased the market higher after a takeover bid by BHP for Anglo American, which analysts said was focused on copper.
Stocks in Latin America fell 0.5%. Mexican stocks eased 0.1% as Arca Continental shares fell 2.1% after the bottler’s first-quarter profit was eroded by the strong Mexican peso. Cement-maker Cemex shed 1.2% after reporting lower operating earnings, even though first-quarter net profit rose 13% on lower taxes and less exposure to financial derivatives.
Brazil’s Bovespa index fell 0.4%, as heavyweight miner Vale weakened after it said lower prices for iron ore, nickel and copper in the first quarter dragged down earnings from the year-ago period.
Argentina’s MerVal rose 1.2% as stocks rebounded after two days of sharp losses. Turkey’s lira was mostly flat after the country’s central bank kept its main interest rate steady at 50%, as expected.
Sri Lanka’s central bank said it is paramount that the country stick to its Extended Fund Facility agreement with the International Monetary Fund and complete its debt restructuring process, it said in a report issued on Thursday.
