Emerging Markets: LatAm currencies strengthen, stocks fall ahead of data-packed week

Turkiye Halk Bankasi

06/10/2025 16:04

EM stocks down 0.54%, FX up 0.57%

Grupo Mexico shares crash after Banamex bid

Mexico's key inflation data later in the week

Peru's rate decision this week

By Nikhil Sharma

Oct 6 (Reuters) - Latin American currencies rose on Monday, while stocks fell, kicking off the week on a mixed note as investors braced for a slate of regional data due later this week.

MSCI's index for Latin American stocks .MILA00000PUS fell 0.54%, while a parallel gauge for currencies .MILA00000CUS advanced 0.57%.

Mexico's local equity index .MXX led the equity decline, tanking 2.3% - set for its worst day since April 29, dragged by miner Grupo Mexico GMEXICOB.MX which sank 18.4% after launching a $9.3 billion bid for Citi's C.N retail unit in the country, Banamex.

Local markets braced for key inflation data later this week, with annual price growth expected to accelerate to 3.8%, but to remain within the central bank's target band of 3%, plus or minus one percentage point.

The Brazilian real BRL= was up 0.3%, while Sao Paulo's main stock index .BVSP fell 0.37% to commence a data-packed week. The country's trade balance data is due later in the day.

A key highlight will be the country's inflation data later this week, which is estimated to show inflation climbing to 5.22% in September on a year-over-year basis, above the central bank's target of 3%, with a tolerance band of 1.5 percentage points in either direction.

"We shouldn't really see any large uptick in inflation. Obviously, if we do, then that could be a cause for a rethink, but at the moment, we think that the growth situation will be the deciding factor on the monetary policy outlook," said Jon Harrison, managing director of EM Macro Strategy at TS Lombard.

Last month, the central bank had parked its key benchmark rates on hold at a near two-decade high of 15% and projected multiple such pauses ahead in a bid to tame inflation. But the sky-high borrowing costs have started to show cracks in the domestic economy.

Peruvian stocks .MXNUAMPESCPGPE were up 0.4% to claim another record peak, while local currency sol PEN= advanced 0.34% in limited trading volumes.

Investors positioned themselves for an interest rate decision later this week, amid expectations that the central bank will keep rates on hold at 4.25%.

Argentina's markets are expected to draw investors with potentially wild swings as the October midterms approach, with worries mounting over the feasibility of President Javier Milei's austerity agenda after a bruising loss in last month's provincial elections.

Markets have struggled to hold gains from a U.S. pledge of fiscal support, including a $20 billion credit swap with the central bank, and U.S. President Donald Trump is slated to meet Milei on October 14.

The local peso ARS=RASL lost 0.32%, while the main equity index .MERV dropped more than 1%.

Elsewhere, officials from Israel and Hamas were in an Egyptian resort on Monday to launch talks that the U.S. hopes will end the Gaza conflict and free the hostages.

Israel's shekel ILS= rose 0.5% to a more than three-year high, while its international bonds remained slightly lower.

Separately, Turkey's state-controlled Halkbank HALKB.IS tumbled 7.2% after the U.S. Supreme Court declined to hear its latest appeal over charges it helped Iran evade U.S. sanctions.

Key Latin American stock indexes and currencies:

Stock indexes
Latest
Daily % change
MSCI Emerging Markets .MSCIEF
1369.75
-0.3
MSCI LatAm .MILA00000PUS
2491.09
-0.54
Brazil Bovespa .BVSP
143665.47
-0.37
Mexico IPC .MXX
60570.21
-2.28
Chile IPSA .SPIPSA
8887.68
-0.03
Argentina MerVal .MERV
1786467.51
-1.03
Colombia COLCAP .COLCAP
1858.3
-0.16
Currencies
Latest
Daily % change
Brazil real BRL=
5.3216
0.29
Mexico peso MXN=
18.3645
0.09
Chile peso CLP=
961.83
0.36
Colombia peso COP=
3848.15
0.51
Peru sol PEN=
3.4485
0.34
Argentina peso (interbank) ARS=RASL
1,429.5
-0.32
Argentina peso (parallel) ARSB=
1,420.0
2.07

 (Reporting by Nikhil Sharma, Editing by Louise Heavens)

 ((Nikhil.Sharma@thomsonreuters.com;))