Business
LatAm assets gain on hopes of US shutdown resolution, commodity strength
LatAm assets gain on hopes of US shutdown resolution, commodity strength
About this update from Banco Bradesco Sa
By Nikhil Sharma and Sukriti Gupta Latin American assets jumped on Tuesday as investors bet on an end to a prolonged U.S. government shutdown, while firmer commodity prices boosted the resource-heavy regional markets.MSCI's gauge for Latin American equities (.MILA00000PUS) jumped 2.3% to reach its highest since April 2022."You're mostly seeing an environment of U.S. dollar depreciation today, which is probably a product of the federal government getting ready to reopen and also some U.S. data that's kind of consistent with the Federal Reserve cutting interest rates, at least in December," said Brendan McKenna, international economist at Wells Fargo. "(this is) placing depreciation on the U.S. dollar, but also supporting Latin America FX over the course of the day."The U.S. Senate on Monday approved a compromise to restore federal funding and extend it through January 30, potentially ending the longest government shutdown in U.S. history.Concerns about elevated technology valuations also resurfaced in the U.S., while a weekly update of ADP's preliminary payroll figures showed that private employers shed an average of 11,250 jobs a week for the four weeks ended October 25, highlighting fears of a deteriorating labor market.MSCI's index for Latin American currencies (.MILA00000CUS) hit an all-time high, up 0.7%, and was set to extend its daily winning run to five sessions, propped up by a weak U.S. dollar.In Brazil, the real FX_IDC:USDBRL rose 0.4%, supported by higher crude prices after new U.S. sanctions on Russian oil. Oil exports account for a sizable share of Brazil's export revenue.Brazilian inflation slowed more than expected to 4.68% in October, building a strong argument for policy easing next year.The current inflation rate is slightly above the central bank's 3% target. The bank had kept the benchmark Selic rate steady last week near a 20-year high and signaled further pauses to guide inflation back to target.Sao Paulo's main stock index BMFBOVESPA:IBOV hit a record high, up 1.5%, and was poised to extend its winning streak to 15 sessions, a run last seen in May 1994. Heavyweight oil firm Petrobras BMFBOVESPA:PETR3 supported the index by rising 2.5%.The index is up more than 31% in 2025, on pace for its best year since 2019, highlighting investors' appetite for developing markets that offer cheaper valuations and higher yields.Colombia's benchmark...