Latin American stocks fell on Friday after weak jobs data in the United States fed fears that the US economic recovery is faltering. Stocks, though, cut losses on hopes the US central bank could soon take fresh measures to boost growth. The MSCI Latin American stocks index lost 0.61 percent. The index posted a weekly gain of 1 percent following a strong rally in July.
In July, the US economy lost more than twice the expected number of jobs as redundancies in the public sector expanded and the private sector hired fewer workers than expected. A separate report showed total US consumer credit shrank for a fifth straight month in June, but at a much more moderate pace than expected. "The signs of a recovery remain in place, even if it is slowing down," said Jaime Aguilera, an equity strategist at HSBC in Mexico City.
While a weak US recovery could hurt Latin America's economic outlook, some market players are betting the US Federal Reserve could use its policy meeting next Tuesday to detail measures it could take to reduce borrowing costs and boost growth. Fresh efforts from the Fed could support further demand for riskier assets, as investors chase higher yields in emerging markets, analysts said. "Despite the bad jobs data today, there is demand for risky assets, which could have a more sideways behaviour going forward," said Aguilera.
Aguilera said further gains for stocks may be limited by uncertainty about the pace of the slowdown, but the promise of ample liquidity from the Fed would keep stocks from suffering a steep correction. Even with Friday's equities losses, Latin American stocks are up 13 percent since the end of June. Analysts said strong growth in Brazil and Chile would help stocks post further gains.
Brazil's Bovespa index shed 0.46 percent as shares is state-run oil company Petrobras fell 1.16 percent and real estate developer Cyrela fell 2.62 percent. Mexico's IPC stock index reversed losses to edge up 0.03 percent. Shares of top US cement supplier Cemex rose 0.75 percent while shares in bottler Grupo Modelo lost 2.09 percent.
In Chile, the IPSA index closed up 0.48 percent at an all-time high after surprisingly cool inflation data for July eased concerns the country's central bank will aggressively tighten borrowing costs, despite stronger-than-expected growth data. Chilean stocks have been posting record highs since June. A central bank estimate from late Thursday also raised Chile's growth forecast for the year to 6.8 percent from 6 percent. Leading gains were shares of Lan Airlines, which rose 3.63 percent while industrial conglomerate Copec gained 0.93 percent.
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