Emerging Markets-Brazil leads Latam gains as close election poll lifts sentiment

Colombia's peso COP= was little changed after Tuesday's 1.8% rise. The peso had eased in recent sessions after becoming the best-performing currency in the region. Local stocks .COLCAP were up 0.7%. Mexican equities added .MXX 0.6%, while the peso MXN= was flat. Mexican Economy Minister Marcelo Ebrard met U.S. Commerce Secretary Howard Lutnick as Mexico pushed for progress on U.S. tariffs on cars and steel, a key source of friction in the countries' trade relationship. Bank of Mexico Deputy Governor Jonathan Heath said the central bank should not cut interest rates again in the short term, and suggested any further easing may be about a year away. Elsewhere, a Morgan Stanley report published on Tuesday said the U.S.-Venezuela oil agreement strengthens the outlook for Venezuela's sovereign debt restructuring and supports higher oil production, although key details remain unclear. Brazilian assets led Latin American markets higher on Wednesday as investors focused on the country's election outlook, while attractive carry-trade opportunities and a softer U.S. dollar boosted regional currencies. Brazil's Ibovespa .BVSP surged 3% to a near four-month high, and was on track for its 11th straight session of gains. The real BRL= strengthened 1% to a three-week high. > "I personally feel pretty constructive about the outlook for Brazil, and especially at current valuations, it's definitely worth taking up the charge," Nur Cristiani, head of LatAm Investment Strategy at JPMorgan Private Bank told the Reuters Global Markets Forum on Wednesday. A poll showed Brazilian President Luiz Inacio Lula da Silva's lead over right-wing challenger Senator Flavio Bolsonaro had narrowed further ahead of October's election, with the two locked in a technical tie. > "As the election approaches, investors are increasingly focused on whether the next government can deliver a more market-friendly policy mix," said Andres Abadia, chief Latin America economist at Pantheon Macroeconomics. Before rallying in recent sessions, Brazilian assets came under pressure as the deteriorating public finances under President Lula's administration came into focus. A Reuters poll of foreign exchange strategists found Brazil's real will avoid big losses into 2027 on expectations that whoever wins next month's presidential vote will tackle fiscal problems. The gains boosted the MSCI's Latin American equities index .MILA00000PUS, which climbed 2.7% to its highest level since May. Global sentiment, however, remained fragile as Tehran and Washington exchanged their biggest attacks since July, sending Brent crude LCOc1 above $95 a barrel, fueling inflation concerns and clouding central bank outlooks worldwide. The regional currency index .MILA00000CUS added 0.4% to trade near all-time highs, aided by a weaker U.S. dollar. Analysts also pointed to attractive carry opportunities that helped offset pressure from higher global yields. > "Carry trades will persist, providing a strong support for currencies. It's not really a bet on fundamentally improving stories, growth, fiscal deficits, and so on, but rather a combination of the weaker dollar with carry trades," Cristiani added.

Emerging Markets-Brazil leads Latam gains as close election poll lifts sentiment

Country moves and policy headlines

Brazil leads Latin American markets higher

Regional stocks and currencies gain on weaker dollar and carry trades

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