Jan 17 (Reuters) - Stocks and currencies in Latin America stumbled on Wednesday as hawkish rhetoric from global central bankers led investors to dial back bets of rate cuts, while concerns around demand from China weighed on commodity prices.
MSCI’s index for Latin American currencies .MILA00000CUS fell 0.7% by 1449 GMT, while a gauge of stocks .MILA00000PUS shed 0.9%. Both indexes fell for the third session in a row.
Hurting risk-sensitive Latam assets, the U.S. dollar =USD and Treasury yields continued their march upwards as Federal Reserve and European Central Bank officials pushed back against traders’ expectations of early interest rate cuts from developed economies.
Data showing stronger-than-expected U.S. retail sales fanned jitters around the monetary policy outlook.
“Retail sales being better than expected keeps the economy above needing any stimulus from looser monetary policy,” said Juan Perez, director of trading at Monex USA.
“Meanwhile, Latam data is likely to cool down and force the more dovish hand of their respective central banks and thus reduce the interest rates that have attracted investors in their currencies.”
Adding to the declines was disappointing economic data from top commodities consumer China that weighed on crude and base metal prices. MET/LO/R
The Brazilian real BRL= hit a one-month low, falling 0.3% as iron ore prices retreated. Iron ore is one of Brazil’s major exports. IRONORE/
The country’s benchmark Bovespa index .BVSP slipped 0.3%, dragged by shares of energy firms and miners.
Retail sales in Latin America’s biggest economy rose 0.1% in November from October, matching market expectations.
The Mexican peso MXN= fell 0.8% against the dollar after logging its biggest one-day percentage fall in over three months in the prior session.
The Colombian peso COP= was down 0.9%. Shares of the country’s state-owned oil company Ecopetrol ECO.CN shed 1.3%.
Chile’s peso CLP=, the currency of the world’s biggest copper producer, dipped 0.3%. The country’s copper production will grow at a slower rate this decade, compared with last year’s estimates according to a study by state agency Cochilco.
The Peruvian sol PEN= outperformed regional peers, advancing 0.2%.
Among stocks, Argentina’s MerVal index .MERV bucked the broader trend to gain 1.8%. Argentina’s President Javier Milei is set to meet with IMF chief Kristalina Georgieva in Davos, where he is pitching his plans to fix the country’s economic crisis.
“The reforms proposals are ambitious and are facing hurdles in the Congress and the courts. Challenging inflation dynamics and protests are important risks,” BofA strategists said in a research note.
Reporting by Amruta Khandekar in Bengaluru; Editing by Angus MacSwan