Emerging Markets-Latam stocks, FX slip after Fed hike; Brazil rate decision in focus

Most Latin American stocks and currencies fell on Wednesday after the U.S. Federal Reserve raised interest rates and signaled further increases in borrowing costs, while investors awaited the Brazilian central bank's decision later in the day. Earlier, Turkey's benchmark BIST 100 index .XU100 fell 5.5% to its lowest level in nearly four months after the latest fund rules by the country's markets regulator triggered liquidity pressures. "In my view, the regulator did the right thing and think it should mid-term strengthen Turkish capital markets. We expect markets to take some time to process, but they should recover afterwards," said Zin Bekkali, chief executive of Silk Invest. Losses in Latin American markets deepened slightly after the Fed delivered an expected 25-basis-point rate hike. The unanimous decision, the first under new Fed Chair Kevin Warsh, reinforced expectations that policymakers could raise rates again this year if inflation pressures persist. "The message that it seems to be sending by increasing interest rates without anyone opposing it is that they're willing to do this one more time, and very likely in December, if they get more evidence of inflationary pressures for the remainder of the year," said Juan Perez, director of trading at Monex. The U.S. dollar strengthened 0.6% and pressured regional currencies. MSCI's Latin American currency index .MILA00000CUS slipped 0.3%, while its regional equities gauge .MILA00000PUS fell 0.8%. Brazil's Bovespa stock index .BVSP fell 0.5% and the real BRL= was steady ahead of the country's interest-rate decision at 5:30 p.m. ET (2130 GMT). The Monetary Policy Committee, Copom, is expected to cut Brazil's Selic benchmark rate by 25 basis points for a fifth straight meeting to 13.75%, according to a Reuters poll. Central bank watchers will focus on how the committee describes an ongoing economic slowdown as they assess expectations that further easing will follow the presidential election next month. Data on the day showed economic activity in Brazil fell a seasonally adjusted 0.2% in July from June, compared with expectations for a 0.1% contraction. Investors were also monitoring the closely contested presidential race, with opinion polls indicating a tight battle between incumbent Luiz Inácio Lula da Silva and challenger Flávio Bolsonaro. In Colombia, the benchmark COLCAP index .COLCAP declined 2.2% and the peso COP= weakened 0.8%. Central bank board member Olga Lucia Acosta said August's inflation surge warrants a reassessment of monetary-policy tightness, adding that further action is needed to guide prices back toward the long-term target. Annual inflation rose to 6.24% in August, its highest level in two years and above analysts' forecasts. Chilean stocks .MICL00000PUS fell 0.8%, while the peso CLP= gained 0.2%. Minutes from the central bank's latest meeting showed policymakers unanimously held the benchmark rate at 4.5% last week, citing unusually high uncertainty. The Mexican stock market was closed for a holiday. Key Latin American stock indexes and currencies at 2011 GMT: | | | | | --- | --- | --- | | Stock indexes | Latest | Daily % change | | MSCI Emerging Markets .MSCIEF | 1684.04 | 0.19 | | MSCI LatAm .MILA00000PUS | 3089.37 | -0.78 | | Brazil Bovespa .BVSP | 185547.66 | -0.51 | | Mexico IPC .MXX | - | - | | Argentina MerVal .MERV | 3024637.88 | -1.79 | | Colombia COLCAP .COLCAP | 2511.76 | -2.16 | | | | | | Currencies | Latest | Daily % change | | Brazil real BRL= | 5.1522 | -0.01 | | Mexico peso MXN= | 17.2433 | -0.6 | | Chile peso CLP= | 953.92 | 0.19 | | Colombia peso COP= | 3135 | -0.82 | | Peru sol PEN= | 3.3564 | -0.04 | | Argentina peso (interbank) ARS=RASL | 1,512.0 | -0.33 | | Argentina peso (parallel) ARSB= | 1,540.0 | 1.28 |

Emerging Markets-Latam stocks, FX slip after Fed hike; Brazil rate decision in focus

Markets slip after Fed hike

Fed decision weighs on regional assets

Brazil, Colombia and Chile central banks in focus

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Stock indexes	Latest	Daily % change
MSCI Emerging Markets .MSCIEF	1684.04	0.19
MSCI LatAm .MILA00000PUS	3089.37	-0.78
Brazil Bovespa .BVSP	185547.66	-0.51
Mexico IPC .MXX	-	-
Argentina MerVal .MERV	3024637.88	-1.79
Colombia COLCAP .COLCAP	2511.76	-2.16

Currencies	Latest	Daily % change
Brazil real BRL=	5.1522	-0.01
Mexico peso MXN=	17.2433	-0.6
Chile peso CLP=	953.92	0.19
Colombia peso COP=	3135	-0.82
Peru sol PEN=	3.3564	-0.04
Argentina peso (interbank) ARS=RASL	1,512.0	-0.33
Argentina peso (parallel) ARSB=	1,540.0	1.28