EMERGING MARKETS – Latam FX, stocks jump as hopes of a slowdown in Fed hikes boost risk assets

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* Dollar tumbles after US jobs data * Petrobras slips on demand to suspend dividends * IMF sees Mexico’s economic growth slowing * Copper prices rise due to disruption in the production in Peru * Colombian Congress approves tax reform bill (adds details, updates price throughout) By Susan Mathew and Ankika Biswas 4 November (Reuters) – Most emerging market currencies and stocks have market north on Friday as risky assets were bid on following U.S. jobs data, coupled with hopes of easing COVID-19-related restrictions in the China focused on imports. The main currency gains were the Brazilian real, up nearly 2%, while the Chilean peso gained 1.9% to a three-week high. Peruvian sol gained 0.2% and the Mexican peso rose 0.6% to a five-month high. The dollar lost as much as 1.8% after slowing U.S. job growth and a rising unemployment rate indicated easing labor market conditions, fueling hopes for a a shift to lower interest rate increases from December. “There’s an offsetting dynamic playing out in the US labor market report,” said Brendan McKenna, international economist and FX strategist at Wells Fargo. “The establishment survey was relatively strong, but the household survey showed a pretty big decline in jobs. I think the Fed is probably a little more focused on the household survey right now, and it kind of drives general dollar weakness and foreign currency, especially emerging market currency, strength.” A broader index of emerging market stocks rose 1% and was set for weekly gains of 5%, its best week in more than two years. The MSCI Latin America stock index jumped nearly 3% following a strong handover from emerging market peers earlier in the day on hopes of easing COVID-19 restrictions in China and optimism around US-China relations. McKenna expects the Fed to hike 50 basis points in December and at a slower pace in early 2023. Risk assets took a hit earlier this week after the Fed took a hawkish tone, dashing hopes of a dovish pivot and raising bets for a higher terminal interest rate. Brazil’s Bovespa stock index rose 1.6% and posted weekly gains of 3%. However, Petrobras lost more than 4% after prosecutors at Brazil’s Court of Auditors demanded a suspension of a dividend payment to the state-owned oil company. Mexican stocks rose 1.67% to their highest level since June. The International Monetary Fund said Mexico was well positioned to navigate a turbulent global environment, despite forecasts of slower economic growth in the near term. In addition, copper prices rebounded on Friday as production disruptions in Peru, the world’s second-largest copper producer, sparked fresh concerns over supplies of the metal amid tight inventories. Colombia’s Congress on Thursday approved a tax reform bill that will raise an additional 20 trillion pesos ($4 billion) a year for the next four years, in part through higher oil and gas duties. coal. Stock Indices and Currencies in Latin America: Stock Indices Latest Daily % Change MSCI Emerging Markets 887.79 3.12 MSCI LATAM 2371.19 2.83 Brazil Bovespa 118646.06 1.5 Mexico IPC 51052.73 1.67 Chile IPSA 5207.28 0.52 Argentina Merval 151075.58 0.415 Colombadre 5.0247 1.91 Mexican Peso 19.5224 0.58 Chilean Peso 927 1.86 Colombian Peso 5087 -0.57 Peruvian Sol 3.9511 0.18 Argentine Peso (interbank) 158.2800 -0.22 Peso Argentinian (parallel) 285 0.70 (Reporting by Susan Mathew in Bengaluru)

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