Latin American and Brazilian stocks, in particular, were lower Monday, June 12, adding to a string of losses last week as investors sell off non-U.S. holdings on fear of rising U.S. interest rates.
Brazil’s Bovespa Index dropped 1520.11 points, or 4.33%. Mexico’s benchmark Bolsa Index plunged 762.47 points, or 4.30%, while Argentina’s Merval Index lost 72.31 points, or 4.56%.
Brazilian shares sank as cautious investors abandoned an initial advance on continued uncertainties over the direction of U.S. Federal Reserve interest-rate policy.
Brazilian equities have seen consecutive declines in recent weeks as investors try to determine when interest rates will crest during the current U.S. monetary tightening cycle.
Brazilian markets will close for a half-day Tuesday for the Brazilian national soccer team’s World Cup match in Germany against Croatia and will shut down Thursday for the Corpus Christi holiday.
Elsewhere, Mexican shares dipped again. In a fifth-straight session of losses Friday, the IPC fell below its 2005 close of 17803 points. The index had climbed to a record-high close of 21823 points on May 9.
In its daily report, BBVA Bancomer blamed the drop in the IPC on global monetary tightening and political uncertainty ahead of Mexico’s July 2 presidential elections. "Despite the overall cheapening of the market, we prefer to concentrate on liquid companies with strong fundamentals," the bank said.
Shares of copper-mining company Grupo Mexico declined. Copper prices have lately receded from record levels as rising interest rates have lowered expectations of global demand for metals, hurting Grupo Mexico’s shares.
Also, miners are on strike at Grupo Mexico’s two main Mexican copper mines, Cananea and La Caridad. The company said last week it intends to close down La Caridad, where strikers have picketed the mine since March 24.
Argentine issues tracked other Latin American exchanges downward on U.S. interest-rate anxieties.
On the economic front, Argentina’s first-quarter economic growth data, due Thursday, may reveal a slower rise than in recent periods, according to a major investment firm. "We project real GDP growth to have grown by only 0.3% in quarter-on-quarter seasonally adjusted terms, the lowest growth rate since 2002, and 8.7% in year-on-year terms," an analyst from the bank said in a research note.
Thomson Financial – www.thomsonfinancial.com