Latin American stocks and currencies rallied on Friday as robust labour data from the United States calmed nerves over fears of sluggish global growth, days after the US Federal Reserve cast doubt on any possible interest rate cuts for 2019. MSCI's index of Latin American stocks jumped 1 percent, with most regional indices climbing, led by Brazil's Bovespa. But shares in Colombia's IGBC lagged. US job growth surged in April and the unemployment rate dropped to a more than 49-year low of 3.6 percent, pointing to sustained strength in economic activity even as last year's massive fiscal stimulus fades.
"The very strong US labor report has provided the lift we see today along with slightly better numbers from Europe indicating that the global slowdown may not be as dramatic," said Christian Lawrence, senior market strategist, LatAm FX at Rabobank. "But there is of course the argument now that we may not see any more rate cuts from the Fed this year given the economic data is so strong."
Fed Chairman Jerome Powell indicated earlier in the week that the central bank was neither looking to hike nor cut borrowing costs, describing the US economy and job growth as "a bit stronger than anticipated." Sao Paulo-traded stocks rose 0.6 percent, led by material stocks and Via Varejo after the Brazilian retailer proposed to change its corporate bylaws.
Itau Unibanco Holding fell after setting lower targets for 2019, despite a higher first-quarter recurring profit as it sees fiercer competition for consumers. Mexican stocks edged up after eight straight sessions of losses, while the peso moved about half a percent higher. Chile's peso rose 0.6 percent, tracking a gain in the price of copper, the country's top export, while stocks on the IPSA index eased off their lowest levels since the beginning of the year. Argentina's peso softened, while stocks rose over 2 percent, largely boosted by financials.