LatAm assets rise as falling oil lifts risk appetite; Brazil polls in focus
SPY•Most Latin American currencies and stocks rose as oil fell from a five-month high to $106 a barrel, with regional stock and currency indexes gaining 0.6% and 1.9%. Brazilian assets advanced ahead of Sunday's presidential runoff, while markets also weighed Mexico trade talks and Colombia's budget.
1. Regional markets advance
Most Latin American currencies and stocks rose on Tuesday as sentiment toward riskier emerging markets improved after crude prices fell. The MSCI LatAm currency index gained 1.9% and the regional stock gauge advanced 0.6%, while oil slipped to $106 a barrel from a five-month high.
2. Brazil election in focus
Brazil's real firmed 0.4% and local stocks gained 1.6% ahead of Sunday's presidential runoff between Senator Flavio Bolsonaro and President Luiz Inácio Lula da Silva. Investors were pricing in a Bolsonaro victory on expectations that potential fiscal consolidation could pave the way for rate cuts, though his odds had narrowed to a technical tie. Bolsonaro said he would restore the Perse tax break for the events sector if elected.
3. Other market moves
Mexico's stocks rose 0.7% and its peso traded flat after President Claudia Sheinbaum said a trade deal with the United States was very close, with tariff issues still to resolve. Colombia's peso fell 0.4% and stocks lost 0.5% after lawmakers approved next year's 634.9 trillion-peso budget, which projects a 9.4% fiscal deficit.
