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EMERGING MARKETS-Brazil real, stocks extend losses on labor reform hurdle
June 20, 2017 / 4:42 PM / 6 months ago

EMERGING MARKETS-Brazil real, stocks extend losses on labor reform hurdle

    By Bruno Federowski
    SAO PAULO, June 20 (Reuters) - Brazil's stocks and currency
extended losses on Tuesday after a Senate committee rejected a
proposal to streamline labor laws, boosting trader concerns over
lawmaker support for President Michel Temer's ambitious reform
agenda.
    The proposal, rejected in the social affairs committee by 10
to 9 votes, now moves to the constitutional and justice
committee before its heads to the floor for a full vote.
    The Brazilian real weakened as much as 1.7 percent to
a one-month low to 3.34 to the greenback, while the benchmark
Bovespa stock index dropped 1.5 percent.
    Five-year Brazilian credit default swaps reached 242 basis
points, the highest since May 22.
    Traders feared a political scandal may have driven some
lawmakers to reconsider their support for other reforms,
including a proposal to cut pension spending seen as critical to
balance the government budget.
    The news drove investors away from Brazilian assets, adding
to falling prices of commodities from iron ore to crude that
weighed on assets from wider emerging markets earlier on
Tuesday.
    News of increased supply by several key oil producers
hammered crude futures to a seven-month low, extending a trend
that has undermined attempts by OPEC and others to support
prices by cutting output.
    Currencies of oil exporters led the declines in Latin
American foreign exchange markets, with the Colombian peso
 slipping 2.2 percent to its weakest in a year. The
Mexican peso was down 1 percent.
    Shares of oil companies tumbled, weighing on stock markets
in the region. Losses in shares of Brazilian state-controlled
Petróleo Brasileiro SA subtracted the most points
from the Bovespa index, while shares of Colombia's Ecopetrol
 dropped 3.3 percent.
    Brazilian miner Vale SA also fell as concerns
over Chinese demand for steel and global oversupply dragged iron
ore futures lower.
    
    Key Latin American stock indexes and currencies at 1635 GMT:
 Stock indexes                                daily %   YTD %
                                               change  change
                                   Latest              
 MSCI Emerging Markets               1006.95    -0.59   17.47
 MSCI LatAm                          2486.56    -2.19    8.62
 Brazil Bovespa                     60951.68    -1.71    1.20
 Mexico IPC                         49020.10     -0.3    7.40
 Chile IPSA                          4800.01    -0.51   15.62
 Chile IGPA                         24042.44    -0.47   15.96
 Argentina MerVal                   21657.19     1.71   28.01
 Colombia IGBC                      10843.39    -0.56    7.06
 Venezuela IBC                     118618.57    -0.24  274.13
                                                             
 Currencies                                   daily %   YTD %
                                               change  change
                                      Latest           
 Brazil real                          3.3321    -1.43   -2.49
 Mexico peso                         18.1485    -1.04   14.30
 Chile peso                              664    -0.38    1.01
 Colombia peso                       3040.62    -2.15   -1.29
 Peru sol                              3.276    -0.31    4.21
 Argentina peso (interbank)          16.1350    -0.53   -1.61
                                                       
 Argentina peso (parallel)             16.59    -0.36    1.39
                                                       
 
 (Reporting by Bruno Federowski)
  

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