By Nikhil Sharma and Pranav Kashyap
Latin American currencies firmed on Monday, but regional stocks stumbled, kicking off the week on a mixed note as investors turned cautious ahead of a wave of key economic data due later this week.
MSCI's index for Latin American stocks (.MILA00000PUS) fell 0.6%, while a parallel gauge for currencies (.MILA00000CUS) advanced 0.7%.
Mexican stocks BMV:ME plunged 2.8%, their steepest drop since April, as shares of Grupo Mexico BMV:GMEXICO/B sank following the mining giant's new bid for Citi's Banamex unit.
The selloff dragged the index to a one-month low, with investors also bracing for key inflation data later this week, expected to show annual price growth accelerating to 3.8% - still within the central bank's target range.
The Brazilian real FX_IDC:USDBRL was up 0.5%, backed by comments from the local central bank chief Gabriel Galipolo who highlighted unmistakable signs that the economy remains heated.
Sao Paulo's stocks BMFBOVESPA:IBOV, meanwhile fell 0.37%.
Brazilian President Luiz Inacio Lula da Silva urged U.S. President Donald Trump to scrap steep tariffs and ease restrictions on Brazilian goods and officials, following what Trump described as a "very good" phone call focused on trade and the economy.
The country's inflation figures are due on Tuesday.
"The real bulls have shrugged off the imposition of 50% tariff on all Brazilian exports to the US, which has been primarily driven by political rather than economic reasons," said Kenneth Broux, senior strategist, FX and rates at Societe Generale.
"Fundamentally, there are strong tailwinds supporting the real, including high carry and elevated yield spread."
Last month, the central bank had parked its key benchmark rates on hold at a near two-decade high of 15% and projected multiple such pauses ahead in a bid to tame inflation. But the sky-high borrowing costs have started to show cracks in the domestic economy.
Peruvian stocks (.MXNUAMPESCPGPE) were flat, just off another record peak, while local currency sol FX_IDC:USDPEN advanced 0.1% in limited trading volumes.
Investors positioned themselves for an interest rate decision later this week, amid expectations that the central bank will keep rates on hold at 4.25%.
Argentine markets turned cautious ahead of the October 26 midterms, losing steam after recent gains fueled by a U.S. pledge of fiscal support - including a $20 billion credit swap with the central bank. The peso FX_IDC:USDARS slipped 0.3%, while the main equity index BCBA:IMV pared some losses and was last down 0.1%.
Concerns mounted over the viability of President Javier Milei's austerity agenda following a bruising defeat in last month's provincial elections.
Israeli and Hamas delegations kicked off indirect talks in Egypt, raising hopes for a breakthrough in the Gaza conflict as the U.S. pushes to fast-track a peace plan. The Israeli shekel climbed 0.5% FX_IDC:USDILS to a more than three-year high, buoyed by optimism around the negotiations. White House spokeswoman Karoline Leavitt said technical discussions are underway, with Washington working as quickly as possible to end the war.
Meanwhile, the African Development Bank will lend Nigeria $500 million this year — part of a $1 billion budget support package — backing President Bola Tinubu's sweeping economic reforms.
Key Latin American stock indexes and currencies:
Equities
Latest
Daily % change
MSCI Emerging Markets CBOE:EFS
1369.74
-0.3
MSCI LatAm (.MILA00000PUS)
2490.34
-0.57
Brazil Bovespa BMFBOVESPA:IBOV
143651.97
-0.38
Mexico IPC BMV:ME
60271.23
-2.76
Argentina Merval BCBA:IMV
1802233.22
-0.155
Chile IPSA BCS:SP_IPSA
8814.29
-0.85
Colombia COLCAP BVC:ICAP
1858.08
-0.17
Currencies
Latest
Daily % change
Brazil real FX_IDC:USDBRL
5.3112
0.48
Mexico peso FX_IDC:USDMXN
18.3441
0.2
Chile peso FX_IDC:USDCLP
962.1
0.33
Colombia peso FX_IDC:USDCOP
3855
0.34
Peru sol FX_IDC:USDPEN
3.4556
0.14
Argentina peso (interbank) FX_IDC:USDARS
1429.5
-0.31
Argentina peso (parallel) (ARSB=)
1430
0.70