Tuesday, May 30, 4:45 PM EDT (Thomson Financial): Latin American stocks
were down sharply today on continued fears that U.S. inflation and interest
rates could be on the rise. Rate uncertainty has been driving investors
away from many emerging markets and into U.S. stocks.
Brazil's Bovespa Index tumbled 1732.64 points, or 4.54%. Mexico's
benchmark Bolsa Index sank 659.20 points, or 3.38%, while Argentina's
Merval Index dropped 59.97 points, or 3.53%.
In addition to inflation and interest-rate anxieties in the States,
today's personnel change at the U.S. Treasury also stoked investor unease:
President Bush announced that Treasury Secretary John Snow has resigned and
will be replaced by Goldman Sachs Group Chairman and Chief Executive Henry
M. Paulson Jr.
Closer to home, Brazil's Central Bank Monetary Policy Committee will
meet Wednesday, when it is expected to cut the Selic base interest rate for
the eighth consecutive meeting. First-quarter gross domestic product
figures will also be released the same day.
On the corporate front, Brazilian miner Companhia Vale do Rio Doce, or
CVRD, declined today after China's official Xinhua news agency said local
steelmakers rejected a 19% hike in iron ore prices. According to Xinhua,
Chinese steelmakers rejected the benchmark 19% price increase and will
continue negotiations with iron ore suppliers BHP Billiton, CVRD and Rio
Tinto in June. The three companies account for 70% of the seaborne iron ore
market.
Elsewhere, after recovering last Thursday and Friday from a string of
losses, Mexican stocks fell today. Local bonds also saw renewed selling.
Mexican interest rates rose across the board at the central bank's
primary auction today amid renewed selling of stocks and bonds in regional
markets. The yield on benchmark 28-day Treasury bills, or Cetes, eked out a
single- basis-point gain to 7.02%, after the Bank of Mexico left the
overnight rate unchanged at 7% at last Friday's monetary policy meeting,
when it reiterated that it sees no room for further monetary loosening
right now.
Among the day's equity movers, Mexican telecom firms led today's
decline into the red, with the shares of wireless phone company America
Movil and fixed-line phone company Telmex ending lower. Copper miner Grupo
Mexico's B shares dropped, and cement maker Cemex CPO shares finished lower
as well. Meanwhile, Mexico's largest retailer, Wal-Mart de Mexico, and
banking group Banorte also ended down.
Mexico's peso declined to its weakest level in more than a year today
as investors returned from a long weekend to continue selling off emerging
market securities. A reduction in exposure to emerging market assets amid
expectations of higher U.S. interest rates has contributed to the peso's
recent weakening.
In Argentina, stocks slid after a two-session rebound, as the local
bourse followed regional and world markets lower.
This is Thomson Financial Corporate Services Latin American Commentary.
The information herein is believed to be true and accurate, we take no
responsibility for inaccurate information and reserve the right to update
our reports. If you have any questions please e-mail James Sang at
james.sang@tfn.com or call 646.822.6233. For more information about Thomson
Financial, please visit our web site at http://www.thomsonfinancial.com.
SOURCE Thomson Financial Corporate Group
back to top
