Latin American stocks extended their rally on Friday, supported by optimism about upcoming corporate earnings, but currencies fell as comments by Federal Reserve Chairman Ben Bernanke propped up the dollar globally. The MSCI stock index for Latin America rose 0.97 percent, extending the week's gains to about 7 percent, as investors bet the upcoming earnings season will confirm the region's economy is recovering sustainably.
Ample global liquidity has also been stimulating appetite for higher-yielding Latin American assets, analysts said. "The asset rallies across Latin American financial markets are starting to look like an unstoppable runaway freight train, with no end in sight," Enrique Alvarez, Latin American strategist for IDEAglobal, said in a report. "Certainly, the avalanche of excess global liquidity also continues to do its part in gunning the markets ahead," Alvarez said.
Leading gains in the region was Peru's IGRA index, which jumped 2.39 percent. Benchmark stock indexes in Brazil, Mexico, Chile and Argentina were 0.3 percent to 0.9 percent higher. The Bovespa index traded above the 64,000-point mark for the first time since the end of June 2008, scoring gains of more than 70 percent so far this year.
Bernanke told a Fed conference that, even as accommodative policies will likely remain in place for an extended period, at some point, when economic recovery takes hold, "we will need to tighten monetary policy to prevent the emergence of an inflation problem down the road." The Mexican peso weakened 0.31 percent to 13.284 to the US dollar while the Chilean peso slipped 0.6 percent to 554.60 per greenback.
The Brazilian real was nearly flat at 1.737 per dollar after closing at a 13-month high the previous session. Yield spreads between emerging market bonds and US Treasuries, a key gauge of investor aversion to risk, tightened 13 basis points to a near 14-month high of 291 basis points, according to the J.P. Morgan EMBI+ index.
Comments
Comments are closed.