Emerging Markets-LatAm stocks, FX slip on softer commodities; eyes on Trump's talks with global leaders

Among other developments, Argentina has been seeking to renegotiate a trade deal previously signed with the US, efforts which Trump's policymakers have pushed back upon, Bloomberg News reported on Tuesday. The Colombian peso `COP=` declined the most among peers, down 0.53%, while the Peruvian sol `PEN=` rose 0.51%, the most among peers. Elsewhere in emerging markets, Hungary's central bank left its benchmark rate unchanged at 5.5% on Tuesday, after three consecutive rate cuts. The bank also reduced its medium-term inflation target to 2.5% from 3% and raised its 2027 inflation forecast. Mexico's economy, the region's second largest, likely expanded 2.5% in August year-on-year, a preliminary estimate showed on Tuesday, while retail sales in the country declined 0.1% in July from June. The central bank of Mexico is widely expected to keep its interest rate unchanged for the third consecutive meeting later in the week. "For Mexico, it's more the trade agreement with US that is more of a driving force for the peso and the economy," added Dehal. The peso `MXN=` declined 0.42%, while stocks in Mexico `.MXX` edged 0.18% higher. The Chilean peso `CLP=` rose 0.4%, as copper prices extended gains for a sixth straight session on Chinese buying. Dehal added that the overall backdrop for the region remains constructive and commodity prices could be more of a tailwind for Latin American markets as AI infrastructure and potential growth in manufacturing could support the prices. Most Latin American assets declined on Tuesday, as weaker oil and softer precious metal prices weighed on the resource-rich region's equities and currencies, while investors awaited signals for geopolitical developments from US President Donald Trump's meeting with global leaders. Brent crude prices eased 0.3% to a two-week low as signs of easing supply risks emerged, with Iran offering to reopen the Strait of Hormuz if US military pressure decreases and reports indicating Saudi Arabia has restarted its East-West oil pipeline. O/R MSCI's index tracking LatAm equities `.MILA00000PUS` fell 0.33%, while its currency equivalent `.MILA00000CUS` slipped 0.17%. Brazil's benchmark index Ibovespa `.BVSP` slipped 0.38%, and the real `BRL=` declined 0.21% against a steady US dollar. Brazil's central bank said on Tuesday that trends in non-earmarked lending were consistent with a slowdown in economic growth, as tight monetary policy continued to restrain activity in Latin America's largest economy. With earnings season still a few weeks away, and uncertainty about the country's October presidential election's outcome, investors expect geopolitical developments and commodity prices to determine the sentiment. "With the Fed entering a tightening cycle and the Middle East conflict weighing on oil prices, commodities and foreign exchange prices will remain key drivers for the region's markets until we see some clarity from elections later," said Michael Dehal, senior portfolio manager, Dehal Investment Partners at Raymond James.

Emerging Markets-LatAm stocks, FX slip on softer commodities; eyes on Trump's talks with global leaders

Other regional and EM developments

Mexico data and central bank outlook

LatAm assets slip as commodities soften

Brazil markets weaken on slowdown concerns

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