Latin American stocks and currencies were mixed on Wednesday, as investors took a breather after several days of gains fueled by progress toward ending the historic U.S. government shutdown.
MSCI’s index for Latin American equities (.MILA00000PUS) was down 0.7%, after climbing 2.2% in the prior session, while a parallel gauge for currencies (.MILA00000CUS) slipped about 0.1% and is set to snap a five-day winning streak.
Members of the House of Representatives headed back to Washington on Tuesday, after a 53-day break, for a vote due on Wednesday evening that could restore federal government funding and bring the longest U.S. shutdown in history to a close.
“There is a big chunk of Latin America that is not in a very solid situation with the U.S. So now that this U.S. government shutdown goes away, the focus is on Latin American problems… Overall, when you look at the fundamentals, there’s nothing really indicating (that) we should feel enthusiastic about the Latin American economy,” said Juan Perez, director of trading at Monex.
Equities around the globe maintained their upward momentum, with MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rising 0.4% on Wednesday.
In Latin America, Brazil’s main Bovespa index fell 0.4% after 15 straight days of gains, a run last seen in May 1994. The index is up about 31% for the year, outpacing a 16.6% rise in Wall Street’s S&P 500 index and highlighting investors hunt for emerging markets offering lower valuations and higher yields.
The Brazilian currency real was up 14.2% year-to-date, with near two-decade-high borrowing costs making it an attractive currency for carry trades.
Broader emerging markets showed similar outperformance, UBS Global Research said, but it expects slower returns in 2026 as U.S. rate cuts are largely priced in and the dollar is unlikely to spark another major rotation into emerging economies.
The real was down about 0.4% for the day, dragged by lower oil prices. Data showed services activity in Brazil grew more than expected in September on a year-on-year basis.
The Chilean peso rose 0.5% and the Santiago stock index SP_IPSA jumped 1.9% to a record high, thanks to higher copper prices. Investors braced for the first round of presidential elections later in the weekend, with polls indicating a lead for Communist Party’s Jeannette Jara in a close contest.
Chile’s central bank board on Tuesday unanimously maintained the countercyclical capital buffer at 0.5% of risk-weighted assets, citing global financial risks.
In Argentina, local peso was down 0.2%, while the benchmark stock index rose 0.9%. Data showed Argentina’s annual inflation rate fell for the 18th straight month in October, as the monthly rate was a tick above market expectations.
In other EM territories, the South African rand strengthened 0.4% after the finance minister announced a lower inflation target in the mid-year budget review. The country’s international bonds advanced, with the 2046 maturity (US836205AV60=TE) gaining 1.2 cents on the dollar.
