Edition:
India

Susan Mathew

EMERGING MARKETS-Brazil's real slides after rate cut; other Latam FX firm

1:09am IST

* Brazil central bank sees little or no room for easing * Mexican peso pares losses on auto output data * EM currencies to firm further - Reuters poll * Brazil to privatize 3-4 larges companies; Bovespa up 1.1% (Updates prices) By Shreyashi Sanyal and Susan Mathew Aug 6 Brazil's real slumped on Thursday after the country's central bank slashed its key lending rate to help an economy devastated by the coronavirus pandemic, while most other Latin American currencies traded flat to higher against a steady dollar. The real fell more than 1% after the central bank cut rates by 25 basis points, as expected, to a record-low 2.00% on Wednesday, but warned there was little or no room for further monetary stimulus. Policymakers said recent economic indicators in Brazil point to a "partial recovery," but noted that uncertainty remains high, especially around the end of the year when emergency fiscal stimulus is expected to wind down. "We maintain our view that the central bank remains on hold until late first quarter or early second quarter of 2021 when it begins to slowly normalize policy," said Sacha Tihanyi, deputy head of emerging markets strategy at TD Securities. But, given the tone of the bank, there remains the risk of further easing in Brazil, he said. Latest data showed Brazil's unemployment rate rose to a three-year high of 13.3%, as the coronavirus-fueled shock continued to inflict severe damage, particularly on the services sector. Mexico's peso pared losses after auto production edged up in July during the second full month that the key manufacturing industry has reopened following closures caused by the pandemic. A Reuters poll showed emerging market currencies are expected to rise a bit further in coming months as a sliding U.S. dollar offsets domestic economic worries from the pandemic. The Chilean peso rose for the first time in four days, up 0.6%. But the world's top copper producer's output of the red metal will likely decrease 1.2% in 2020, state copper commission Cochilco said on Thursday. Among stocks, Sao Paulo shares jumped 0.9%, in line with a strong session in Wall Street. Economy Minister Paulo Guedes said the government is set to announce the privatization of three or four large companies within the next 30 to 60 days. He did not name the companies. Ecuador negotiated a one-year grace period on a credit line from the China Development Bank that will allow the country to delay $417 million in payments, the country's finance minister said on Wednesday. The Peruvian sol and stocks traded flat after the country's president named former defense minister Walter Martos the new prime minister as part of a Cabinet reshuffle over a clash with the opposition-held Congress. Key Latin American stock indexes and currencies at 1930 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1105.99 0.27 MSCI LatAm 2041.19 -0.26 Brazil Bovespa 103755.53 0.93 Mexico IPC 37873.83 -0.07 Chile IPSA 3958.24 0.66 Argentina MerVal 50613.31 -0.747 Colombia COLCAP 1137.20 -0.07 Currencies Latest Daily % change Brazil real 5.3537 -1.15 Mexico peso 22.3810 -0.10 Chile peso 771.7 0.70 Colombia peso 3741.19 0.90 Peru sol 3.5418 0.06 Argentina peso 72.6900 -0.10 (interbank) (Reporting by Shreyashi Sanyal in Bengaluru Editing by Paul Simao and Jonathan Oatis)

Glencore tumble weighs on FTSE 100; BoE sees longer recovery period

06 Aug 2020

London-listed shares broke a three-day winning run on Thursday as commodities giant Glencore tumbled after scrapping its dividend to pay down debt, while the Bank of England forecast a slower-than-expected rebound from the COVID-19 pandemic.

UPDATE 2-Glencore tumble weighs on FTSE 100; BoE sees longer recovery period

06 Aug 2020

(For a live blog on European stocks, type LIVE/ in an Eikon news window) * BoE now sees recovery to pre-pandemic levels by end-2021 * Glencore scraps dividend, books $3.2 billion charge * Aviva surges on plan to reduce Asia, Europe focus * FTSE 100 down 1.3%, FTSE 250 off 0.9% (Updates to market close) By Sagarika Jaisinghani and Susan Mathew Aug 6 London-listed shares broke a three-day winning run on Thursday as commodities giant Glencore tumbled after scrapping its dividend to pay down debt, while the Bank of England forecast a slower-than-expected rebound from the COVID-19 pandemic. Glencore dropped 8.1% as it also booked a $3.2 billion impairment charge, driving the FTSE 100 down 1.3%. With the pound stronger, London shares in miners BHP , Rio Tinto fell after solid gains on Tuesday, as did oil majors BP and Royal Dutch Shell . The BoE said the British economy would not recover to its pre-pandemic size until the end of next year - later than its earlier estimate, but its projections for 2020 were less grim than in May. There was no immediate case to cut rates below zero, it added. But, "there is little incentive to rule out negative rates right now and we expect the market to stay very invested in this debate well into 2021," said strategists at ING. "In choosing to keep the bank rate and the asset purchasing program target unchanged, the BoE still has the door open for further policy action – probably at the November meeting." Despite a stimulus-led rally since April, the FTSE 100 is still down about 20% this year with surging COVID-19 cases raising the spectre of further lockdowns. This compares to a 3% rise for the S&P 500 with a U.S. fiscal aid package eyed. British Housing Secretary Robert Jenrick said new housing starts could be down as much as 40% this year even with the industry showing signs of recovery. Homebuilders Taylor Wimpey , Barratt Developments and Persimmon lost between 3.7% and 4.3%. At the other end, insurer Aviva's shares shot up 4.6% as analysts cheered its decision to reduce focus on Asia and Europe after reporting a 12% drop in first-half operating profit. The mid-cap FTSE 250 was down 0.9%, with industrial and financial stocks among the biggest drags. (Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Subhranshu Sahu and Lisa Shumaker)

EMERGING MARKETS-Brazil's real weakens ahead of expected rate cut; Mexican peso snaps losing run

06 Aug 2020

* Brazil central bank seen cutting rates to record low of 2% * Brazil PMIs show economic activity falls in July for 5th month * Nearly 5 mln people returned to work in Mexico in June - poll * Mexican peso up for the first time in eight sessions (Updates prices) By Shreyashi Sanyal and Susan Mathew Aug 5 Most Latin American currencies rose against a weaker dollar on Wednesday, while Brazil's real fell ahead of what is expected to the central bank's final interest rate cut in its one-year long easing cycle. The real fell 0.3% against the dollar as Copom, the central bank's rate-setting committee, is set to cut its key interest rate to a record low of 2.00% at market close in a final 25 basis points move to cushion an economic collapse. "Following the massive collapse in growth caused by COVID, the current economic indicators in Brazil are signaling an economic recovery, but pre-crisis levels are still a long way off," said Alexandra Bechtel, forex and emerging markets analyst at Commerzbank. "The bar is set high for further rate cuts, in particular as more stable framework conditions (budget deficit etc.) would be required for lower rate levels." Economic activity in Brazil contracted in July for a fifth straight month, a survey showed, a result of the dominant services sector still struggling under the weight of the COVID-19 crisis. Economy Minister Paulo Guedes on Wednesday said Brazil may reduce its new VAT tax to as much as 8% if the proposed 12% rate ends up increasing the country's overall tax burden. The VAT proposal was the first part of the government's wider tax reform agenda. Sao Paulo listed stocks snapped a four-day losing streak on a commodity boost as oil and metal prices soared. Even as Latin American assets recovered sharply from March lows, economists at Scotiabank say it will take several quarters for the economies to return to pre-COVID-19 levels of economic activity even with strong growth into 2021. The heavily controlled Argentine peso was range-bound a day after the country reached a deal with creditors to restructure $65 billion of sovereign debt. The Merval stock index continued to fall after its strong surge post the deal. Argentina's June industrial production fell at a much slower pace than the previous month and lesser that analysts expectation, data showed on Wednesday. Crude exporter Mexico's peso rose for the first time in seven sessions, gaining more than 1% as the greenback extended declines. Data on Wednesday showed nearly 5 million people returned to work in Mexico in June, though formal unemployment continued to rise. Mexican stocks added 1.2%, as silver miner Peñoles , soared 13.7% on rising prices of precious metals. Key Latin American stock indexes and currencies at 1943 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1103.25 1.25 MSCI LatAm 2043.46 2.07 Brazil Bovespa 102889.09 1.65 Mexico IPC 37957.01 1.31 Chile IPSA 3934.13 0.2 Argentina MerVal 50999.69 -2.274 Colombia COLCAP 1136.94 0.76 Currencies Latest Daily % change Brazil real 5.2977 -0.28 Mexico peso 22.3620 1.27 Chile peso 777.1 -0.72 Colombia peso 3774.73 0.13 Peru sol 3.5438 0.19 Argentina peso 72.6100 -0.06 (interbank) (Reporting by Shreyashi Sanyal in Bengaluru Editing by Marguerita Choy and Lisa Shumaker)

Gold surge, Hastings buyout lift London stocks ahead of BoE meeting

05 Aug 2020

Surging prices for gold and other metals and a $2.2 billion buyout offer for Hastings Group saw London's mid-cap index post its best session in seven weeks on Wednesday, with some upbeat earnings and economic data also aiding sentiment.

UPDATE 2-Gold surge, Hastings buyout lift London stocks ahead of BoE meeting

05 Aug 2020

* FTSE 100 jumps 1.1%, FTSE 250 surges 1.9% (Updates to close)

EMERGING MARKETS-Argentine bonds rally on debt deal; Brazil's real outperforms Latam FX

05 Aug 2020

* Argentine stocks reverse course after strong surge * Near-term rally an opportunity to pare back on Arg peso-Citi * Brazil's largest lender Itau Unibanco falls after weak results * Ecopetrol rises on narrowly avoiding loss in Q2 (Updates prices) By Ambar Warrick and Susan Mathew Aug 4 Brazil's real firmed on Tuesday, cheered by a rise in industrial output, while Argentine bonds rose after the country struck a deal to restructure $65 billion in sovereign debt. After multiple deadline extensions, Argentina said it had reached a deal with three creditor groups, which potentially could help it climb out of a damaging default and revive the recession-hit economy. The country had slipped into its ninth sovereign default in May this year. Argentina's Merval stock index, which had jumped 6.6% on Monday and almost 7% this session to scale a record high, reversed course to trade 0.7% lower. The peso slipped marginally to hit new lows, while traders said Argentina's over the counter bonds closed an average 8.7% higher. "With the removal of this uncertainty and potential engagement with the International Monetary Fund, we think further upside is likely (for Argentine bonds) in the coming weeks," said Citigroup FX strategists. However, "this near term rally (in local assets) would be an opportunity for investors to pare back on their peso positions, which have rallied meaningfully since April on the back of local exchanges, more regulatory changes, and a more favorable external environment," they said. Brazil's real outperformed peers, up 0.3%. Data showed that industrial output in the country marked its second-biggest increase ever in June, as the sector continued to claw back from disruptions caused by the pandemic. On Wednesday, the central bank is expected to cut interest rates to a record low 2% as it continues to try and mitigate the impact of the coronavirus. The Mexican peso was at three week lows against a weaker dollar, and Colombia's currency lost 0.5%, but both traded well off session lows as oil prices recovered on U.S. stimulus hopes. Among stocks, Brazil's Bovespa stock index extended losses to a fourth straight session, pulled down by heavyweight lender Itau Unibanco Holding, after its quarterly profit plunged 40%. Colombian oil major Ecopetrol rose almost 3% after it narrowly avoided a second-quarter loss expected by analysts. It reported a 99% decline in net profit due to the fall in global oil prices, and said it would invest up to $13 billion over the next three years. Chilean stocks rose 0.1%. The country's central bank is likely to stay pat on its benchmark interest rate, through at least the next 12 months, a central bank poll of traders showed on Tuesday. Key Latin American stock indexes and currencies at 1943 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1089.86 1.11 MSCI LatAm 2006.28 -0.93 Brazil Bovespa 101058.88 -1.72 Mexico IPC 37522.50 -0.06 Chile IPSA 3950.75 0.11 Argentina MerVal 52132.51 -0.708 Colombia COLCAP 1129.40 -0.33 Currencies Latest Daily % change Brazil real 5.2975 0.28 Mexico peso 22.7470 -0.54 Chile peso 771.2 -1.84 Colombia peso 3779.45 -0.52 Peru sol 3.5508 -0.28 Argentina peso 72.5600 -0.06 (interbank) (Reporting by Ambar Warrick in Bengaluru; Editing by Sandra Maler and Marguerita Choy)

FTSE 100 flat on mixed earnings, Sino-U.S. tensions; BP, easyJet surge

04 Aug 2020

London's blue-chip FTSE 100 ended flat on Tuesday as mixed earnings and rising friction between the United States and China weighed, while a surge in budget airline easyJet on adding more flights lifted the mid-caps index.

UPDATE 2-FTSE 100 flat on mixed earnings, Sino-U.S. tensions; BP, easyJet surge

04 Aug 2020

(For a live blog on European stocks, type LIVE/ in an Eikon news window) * BP up 6.5% as it speeds up reinvention * Diageo sales plunge on lower alcohol demand * EasyJet jumps on plan to resume more flights * FTSE 100 off 0.05%, FTSE 250 adds 0.9% (Updates to close) By Sagarika Jaisinghani and Susan Mathew Aug 4 London's blue-chip FTSE 100 ended flat on Tuesday as mixed earnings and rising friction between the United States and China weighed, while a surge in budget airline easyJet on adding more flights lifted the mid-caps index. Spirits maker Diageo Plc was the biggest drag on the FTSE 100 as coronavirus lockdowns saw it take a 1.3 billion pound writedown and report a bigger-than-expected decline in underlying net sales. Oil major BP Plc , meanwhile, posted its best day in two months after unveiling earlier than expected a plan to reduce its oil and gas output by 40% and boost investments in renewable energy over the next decade. Sino-U.S. tensions escalated following U.S. President Donald Trump's move to force a sale of Chinese-owned video app TikTok's U.S. operations. China will not accept the "theft" of its technology company and is able to respond to Washington's move, the China Daily said. The FTSE 100 has struggled to build on a stimulus-led stock market rally with the world sliding into a deep recession and surging COVID-19 cases threatening even more lockdowns. The focus this week is on a Bank of England meeting where it is expected to hold interest rates and shed more light on the pace of an expected domestic rebound. "As the (BoE) wants to keep its powder dry for as long as possible, we don't expect any bold statements or strong hints at additional easing," said Stefan Koopman, senior market economist at Rabobank. But a monetary policy response could be seen by November, Koopman said, given Brexit-related risks, a possible second wave of the virus and increasing unemployment. The mid-cap FTSE 250 rose 0.9% as easyJet Plc jumped 8.8% on plans to fly at 40% of its capacity over the rest of the summer, while a first-half profit beat saw insurer Direct Line hit five-month highs. But a 9.4% slump for Babcock following a plunge in quarterly profit, capped gains. (Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Subhranshu Sahu and Lisa Shumaker)

EMERGING MARKETS-Brazil real drops 2.2% on rate-cut bets; LatAm FX falls on strong dollar

04 Aug 2020

* Brazil's real down 2%; cenbank meeting on Wednesday * Brazil manufacturing activity expands at record pace in July * EM stocks saw foreign net inflows in July, outlook uncertain-IIF * Mexico's Alfa jumps 25% on plans to spin-off Nemak * Argentina debt deadline in focus (Updates prices) By Ambar Warrick and Susan Mathew Aug 3 Brazil's real sank 2.2% on Monday as markets factored in an interest rate cut expected by the central bank, while a strong dollar and surging coronavirus cases in Latin America pressured other currencies in the region. Most currencies retreated after strong gains in July, where hopes of a COVID-19 vaccine and better commodity prices had supported buying. Brazil's central bank is expected to cut rates further into record-low territory on Wednesday as it continues to try and mitigate the impact of the COVID-19 pandemic. Gustavo Rangel, chief economist, LATAM at ING pointed to two factors that may tip the balance in favor of keeping the door open to additional rate cuts: recent lower-than-expected inflation, and the fact that the real has consolidated a stronger trading range when compared to the lows seen in April-May. "Such an outcome would, necessarily, help keep FX volatility high and maintain an underperforming bias for the BRL." Data on Monday showed manufacturing activity in Latam's largest economy expanded at a record pace in July, while separate data showed Brazil posted a record $8.1 billion trade surplus as the pandemic led to another steep fall in imports. The Institute of International Finance said emerging market stocks and bonds saw foreign net inflows for a second consecutive month in July, but the outlook remains uncertain. With Latam nearing the 5 million COVID-19 cases mark, investors are cautious about fresh lockdowns to contain the virus' spread. Brazil is the second-worst hit country in the world, behind the United States. Mexico's peso fell 1.8%, while Colombia's peso hit a five week low against the dollar which surged after upbeat manufacturing sector numbers from around the globe. Chile's peso weakened in tandem with the prices of copper, the country's largest export. Data showed that Chile's economic activity fell 12.4% in June from the same month a year ago, but contracted less than expected. Among stocks, Mexico's Ipc index looked to post its best day in six weeks led by conglomerate Alfa's 25.3% jump after it announced plans to spin-off its remaining 75% stake in auto parts business Nemak. Most other regional bourses gained, as possible multibillion-dollar deals and efforts to work-out a crucial U.S. stimulus plan lifted Wall Street. Argentina's peso fell and bonds dipped almost 1% as the government weighed extending its $65 billion debt negotiations, which have hit a roadblock ahead of an Aug. 4 deadline after creditors rejected the country's "final" offer and rallied behind a counterproposal. Key Latin American stock indexes and currencies 1930 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1077.84 -0.1 MSCI LatAm 2028.48 -1.86 Brazil Bovespa 102851.05 -0.06 Mexico IPC 37711.97 1.87 Chile IPSA 3974.47 -1.06 Argentina MerVal 53576.37 8.777 Colombia COLCAP 1140.30 0.53 Currencies Latest Daily % change Brazil real 5.3312 -2.17 Mexico peso 22.6733 -1.77 Chile peso 760.1 -0.51 Colombia peso 3767 -0.95 Peru sol 3.5407 -0.25 Argentina peso 72.5100 -0.26 (interbank) (Reporting by Ambar Warrick in Bengaluru; editing by Jonathan Oatis and David Gregorio)

World News