Latin American stocks slid for the fourth straight session on Friday while most currencies weakened in the region after J.P. Morgan reported deep losses on mortgage and credit card loans, frustrating investors who expected signs of improving US credit conditions.
Mexican stocks slid more than 1 percent on the J.P. Morgan report, as investors feared weak credit conditions in the United States may delay a recovery in neighbouring Mexico. J.P. Morgan Chase & Co said it set aside $4.2 billion to cover mortgage losses in the fourth quarter, up $653 million from the same quarter a year earlier. Loan loss reserves in its commercial banking unit increased to $494 million from $190 million.
Cushioning the fall in Mexican stocks were growing bets the central bank, now under the realm of Agustin Carstens, will not raise interest rates before the second half of the year. Such expectations grew after the central bank kept rates unchanged at 4.5 percent on Friday, saying weak economic growth would dampen the inflationary effects of recent tax hikes.
Mexico's benchmark IPC index lost 1.23 percent, while the Brazilian Bovespa index declined 1.2 percent. The MSCI stock index for Latin America was 1 percent lower late on the day. It has declined more than 3 percent in four consecutive sessions of losses. Most Latin American currencies also weakened. The Brazilian real ended 0.39 percent down at 1.773 per US dollar. The Mexican peso slid 0.22 percent to 12.696 per greenback.
Meanwhile, a source with the Argentine Finance Ministry said the US Securities and Exchange Commission has responded to the paperwork recently filed in connection to the country's planed swap of defaulted debt. Investors have become slightly more upbeat about the long-planned Argentine debt swap, despite a series of obstacles including a dispute with Central Bank Governor Martin Redrado and the embargo of an account held by the central bank with the New York Federal Reserve.
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