June 3, 2019 / 3:09 PM / 2 months ago

EMERGING MARKETS-Latam FX, stocks rise; Mexican peso falls

    By Susan Mathew
    June 3 (Reuters) - Mexico's peso stayed at five-month lows
on Monday as investors awaited further developments after U.S.
President Donald Trump threatened to impose tariffs on Mexican
imports, while most other Latin American currencies firmed
against a softer dollar. 
    Mexico's peso was down 0.6%, compared with gains of
between 0.2% to 0.6% by other regional currencies on the back of
weakness in the greenback.
    As negotiations between Mexico and United States are set to
begin on Monday in Washington, Mexican President Andres Manuel
Lopez Obrador said an agreement could be reached with the United
States to resolve a dispute over migration.
    Mexican markets fell sharply on Friday after Trump said a 5
percent tariff would be imposed on all Mexican exports to the
United States starting June 10.
    The tariffs would rise per month until they reached 25
percent and stay at that rate until Mexico stops the inflow of
migrants into the United States via the southern border.
    "Markets in particular want to know if the June 10 tariff
will be a reality. At this point markets are mostly pricing in
that it will be a reality," said Per Hammarlund, chief emerging
market strategist at SEB. 
    "Markets are not convinced at this stage that Trump will
hike tariffs until 25 percent simply because it would be too
disruptive of U.S. business interests," he said pointing to how
highly the auto sector is integrated between the two countries. 
    "It would be noticeable on U.S. car prices, and I think
Trump is not going to risk that ahead of elections next year."
    Mexican shares rebounded from last session's decline
to rise 0.3%, in line with other regional as well as broader
emerging market peers.
    Energy infrastructure company IEnova was the
biggest gainer in Mexico, up 2.5%, followed by cement producer
Cemex , 1.9% higher.  
    In Brazil, the real hit an more than a six-week high,
while the Bovespa stock index climbed 0.3% with oil
company Petrobras providing the biggest
boost. 
    Investors seemed to shrug off data showing Brazilian
manufacturing activity slowed to its weakest pace in 10 months
in May. 
    Stocks markets in Colombia were closed for a local holiday.
    
    Key Latin American stock indexes and currencies at 1425 GMT:
 
    Stock indexes             Latest    Daily %
                                         change
 MSCI Emerging Markets         1008.88      1.09
                                        
 MSCI LatAm                    2695.50      0.44
                                        
 Brazil Bovespa               97298.77      0.28
                                        
 Mexico IPC                   42891.60      0.33
                                        
 Chile IPSA                    5004.34      0.55
                                        
 Argentina MerVal             34184.26      0.69
                                        
                                                
       Currencies             Latest    Daily %
                                         change
 Brazil real                    3.9008      0.56
                                        
 Mexico peso                   19.7300     -0.60
                                        
 Chile peso                      707.2      0.27
                                        
 Peru sol                        3.375      0.18
                                        
 Argentina peso                44.7300      0.04
 (interbank)                            
                                        
 

 (Reporting by Susan Mathew in Bengaluru;)
  
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