BRASILIA: Latin American stocks dropped on Friday, echoing sour global market sentiment after hawkish comments from Federal Reserve officials dimmed hopes for a US rate cut next month, while attention shifted to a closely watched presidential vote in Chile this weekend.
MSCI’s index for Latin American equities fell 1.4 percent, falling in sympathy with a global market selloff. MSCI’s broadest gauge of Asian shares outside of Japan fell 1.5 percent, while Wall Street’s benchmark S&P 500 index lost 0.5 percent.
An increasing number of Fed policymakers have expressed reluctance to ease rates further, citing persistent price pressures and a firm labor market despite two US rate cuts earlier this year.
Despite the losses in LatAm, the main equity index was still up 1.9 percent for the week and on track for a fifth straight weekly rise, supported by gains earlier in the week on hopes for an end to the historic US government shutdown.
An equivalent gauge for regional currencies lost 0.2 percent and was on track for its best week since early September, leveraging a softness in the US dollar throughout the week.
LatAm investors head into a pivotal weekend with Chile’s presidential election on Sunday, a close contest pitting the ruling leftist coalition against a range of right-wing candidates at a time when crime and immigration are top of mind for voters.
Chile’s peso fell 0.6 percent but was headed for an overall weekly rise, while the main equity index lost 0.44 percent and was up 0.4 percent for the week.
In Peru, the central bank on Thursday held its benchmark rate at 4.25 percent for the second straight meeting, in line with analysts’ expectations, noting that most economic indicators improved last month.
The country’s Lima Stock Exchange rose 0.3 percent - taking its weekly gains to 0.27 percent. The sol currency traded in tight ranges throughout the week.
In Brazil, the real added 0.23 percent, and the main stock index rose 0.49 percent; both are on pace for their fifth-straight weekly gains.
In Argentina, the local peso was set for its third straight weekly rise, while the benchmark stock index was up 1.2 percent week-to-date.
Elsewhere, Senegal braced for a key credit rating decision from S&P Global later on Friday after days of investor concerns about the country’s impending debt crunch and the lack of progress on a new loan program with the International Monetary Fund.
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