Latin American stocks rose on Friday after the head of the US Federal Reserve raised some hope that US policymakers could offer more stimulus after a policy meeting next month. The MSCI Latin American stock index added 0.57 percent. The index is headed for its worst month since 2008 after slumping around 12 percent on anxiety about a US recession and Europe's debt crisis.
Major stock indexes in Brazil and Mexico fell nearly 2 percent on Friday in initial disappointment over the lack of any concrete pledge of new stimulus from the Fed. But stocks rebounded from session lows to claw their way back into positive territory. Fed Chairman Ben Bernanke said the Federal Open Market Committee would extend its September meeting to two days from one to discuss options for stimulus.
"The content of the conference leans a bit to the side that one could expect a further loosening of monetary policy," said Rodolfo Navarrete, head of analysis at brokerage Vector in Mexico City. The Fed's last round of stimulus, or so-called quantitative easing, boosted global equity markets and commodity prices after it was announced last August.
The United States is a major trading partner with Latin America and buys around 80 percent of Mexican exports. Brazil's Bovespa index rose 0.75 percent as shares of Vale, the world's biggest iron ore miner, added 1.88 percent and Itau Unibanco, the country's biggest private- sector bank, rose 2.48 percent. Mexico's IPC index added 0.41 percent to 34,04.22 points as miner Grupo Mexico gained 1.79 percent.
The 34,000 level coincides with the two-thirds retracement of the IPC's rally from August 2010 to a record high in January that followed Bernanke's speech the previous year in Jackson Hole, Wyoming, where he tipped the Fed's QE2 plan. If the index falls further below this level, it suggests the IPC may test its low from early August, its cheapest level in a year, analysts said. Chile's IPSA index rose 0.18 percent on 1.44 percent gain in shares of retailer Falabella.
Investors will focus on major US data due next week on personal income, manufacturing sentiment and employment. Weak data could deepen fears of another US recession, but it could also raise bets the Fed will deliver more stimulus. "The market is going to depend on economic performance and how the key US data comes out," said Gerardo Copca, a strategist at brokerage Metanalisis in Mexico City. "The medicine the market need is better data."