LOS ANGELES (MarketWatch) — Stocks across key Latin American markets fell Monday, hurt by a worsening outlook for any resolution to Europe’s long-running debt crisis.
Benchmark stock indexes in Brazil, Mexico, Chile and Argentina were in the red, along with U.S. stocks, as Portugal’s government bond yields jumped to euro-era records on fears Lisbon will be forced write down the value of its debts.
Portugal’s yields have been rising this month after Standard & Poor’s Ratings Services downgraded Portugal to junk status. Read more about surging Portuguese bond yields.
But the markets also managed to come off their worst levels during afternoon trade. Brazil’s Ibovespa BR:BVSP-0.21% lost 0.3%. The index in the previous session slipped 0.1%, with the loss breaking the index’s longest winning streak since early August 2010.
Argentina’s Merval AR:MERV -2.15% slumped 2.3% and Mexico’s IPC MX:IPC +0.15% fell 0.2%. Chile’s IPSA CL:IPSA -0.09% declined 0.5%.
Portugal may have to follow Greece’s lead in writing down the value of its debts.
But investors appear to be growing nervous that talks between Greece and its private bondholders over a debt writedown are into a third week.
The concerns about Portugal and Greece prompted a pullback in European stocks Monday, which left the Stoxx Europe 600 Index XX:SXXP +0.50% down 1.1%. Read more about Monday's losses among European stocks.
On Wall Street, the S&P 500 Index SP -0.25% fell 0.3% and the Dow Jones Industrial
Average DJIA-0.05% fell 0.1%, but was well off session lows.
Also hurting stocks in the U.S., Latin America and Europe on Monday was a U.S. government report showing consumer spending stalled in December and that Americans used an increase in wages to bulk up their savings accounts. Read about the U.S. spending, savings data for December.
Consumer spending accounts for roughly 70% of U.S. economic activity. Mexico is particularly sensitive to economic conditions in the U.S. as it sends about 80% of its products to the U.S.
Losses were broad-based in Buenos Aires trading, with finance stocks extending declines after last week’s decision by the central bank to raise capital requirements. Banco Macro BMA-3.17% fell 4.2% and Grupo Financiero Galicia GGAL -0.64% fell 2.5%.
Meanwhile, shares of oil and gas producer YPF YPF+0.75% stumbled 10%. YPF is a subsidiary of Spain’s Repsol YPF REPYY -3.13% ES:REP -2.67% .
Economists covering Latin America at Bank of America Merrill Lynch said in a report Monday that while it’s widely believed that problems in Europe will persist, the equity clients and some fixed-income clients in the U.S. they’ve recently visited have expressed overall “short-term optimism” about regional prospects.
Economists Marcos Buscaglia and David Beker said driving the sentiment was the view held by many clients that the liquidity injection at the end of 2011 by the European Central Bank is “disguised” quantitative easing.
Clients appeared more confident that China will avoid a hard landing, and some expressed disagreement about the 2012 U.S. deceleration outlook from B. of. A.’s U.S. economists.
Brazilian equity investors “showed increased comfort with GDP growth acceleration ahead” in Latin America’s largest economy.
Anticipation that the government will announce, if necessary, new growth measures, an outlook for further interest-rate cuts, and an increase in consumption from a minimum wage increase each support the growth outlook, the economists said.
The wage increase will aid the basic-consumption sector, they said.
“We continue to expect a V-shaped recovery in Brazil with a very strong GDP performance in the second half of the year,” the economists said in the report.
As the first month of 2012 near its end, the Ibovespa is looking at a gain of roughly 10%. It lost 18% in 2011.
Meanwhile, investors were “positive” on the Mexican macro outlook stemming from their view on prospects in the U.S., and that Mexico’s credit story “could cause domestic demand to continue to surprise on the upside,” the B. of A. economists wrote. Main concerns were about upcoming elections in Mexico.
marketwatch.com
Benchmark stock indexes in Brazil, Mexico, Chile and Argentina were in the red, along with U.S. stocks, as Portugal’s government bond yields jumped to euro-era records on fears Lisbon will be forced write down the value of its debts.
Portugal’s yields have been rising this month after Standard & Poor’s Ratings Services downgraded Portugal to junk status. Read more about surging Portuguese bond yields.
But the markets also managed to come off their worst levels during afternoon trade. Brazil’s Ibovespa BR:BVSP-0.21% lost 0.3%. The index in the previous session slipped 0.1%, with the loss breaking the index’s longest winning streak since early August 2010.
Argentina’s Merval AR:MERV -2.15% slumped 2.3% and Mexico’s IPC MX:IPC +0.15% fell 0.2%. Chile’s IPSA CL:IPSA -0.09% declined 0.5%.
Portugal may have to follow Greece’s lead in writing down the value of its debts.
But investors appear to be growing nervous that talks between Greece and its private bondholders over a debt writedown are into a third week.
The concerns about Portugal and Greece prompted a pullback in European stocks Monday, which left the Stoxx Europe 600 Index XX:SXXP +0.50% down 1.1%. Read more about Monday's losses among European stocks.
On Wall Street, the S&P 500 Index SP -0.25% fell 0.3% and the Dow Jones Industrial
Average DJIA-0.05% fell 0.1%, but was well off session lows.
Also hurting stocks in the U.S., Latin America and Europe on Monday was a U.S. government report showing consumer spending stalled in December and that Americans used an increase in wages to bulk up their savings accounts. Read about the U.S. spending, savings data for December.
Consumer spending accounts for roughly 70% of U.S. economic activity. Mexico is particularly sensitive to economic conditions in the U.S. as it sends about 80% of its products to the U.S.
Losses were broad-based in Buenos Aires trading, with finance stocks extending declines after last week’s decision by the central bank to raise capital requirements. Banco Macro BMA-3.17% fell 4.2% and Grupo Financiero Galicia GGAL -0.64% fell 2.5%.
Meanwhile, shares of oil and gas producer YPF YPF+0.75% stumbled 10%. YPF is a subsidiary of Spain’s Repsol YPF REPYY -3.13% ES:REP -2.67% .
Economists covering Latin America at Bank of America Merrill Lynch said in a report Monday that while it’s widely believed that problems in Europe will persist, the equity clients and some fixed-income clients in the U.S. they’ve recently visited have expressed overall “short-term optimism” about regional prospects.
Economists Marcos Buscaglia and David Beker said driving the sentiment was the view held by many clients that the liquidity injection at the end of 2011 by the European Central Bank is “disguised” quantitative easing.
Clients appeared more confident that China will avoid a hard landing, and some expressed disagreement about the 2012 U.S. deceleration outlook from B. of. A.’s U.S. economists.
Brazilian equity investors “showed increased comfort with GDP growth acceleration ahead” in Latin America’s largest economy.
Anticipation that the government will announce, if necessary, new growth measures, an outlook for further interest-rate cuts, and an increase in consumption from a minimum wage increase each support the growth outlook, the economists said.
The wage increase will aid the basic-consumption sector, they said.
“We continue to expect a V-shaped recovery in Brazil with a very strong GDP performance in the second half of the year,” the economists said in the report.
As the first month of 2012 near its end, the Ibovespa is looking at a gain of roughly 10%. It lost 18% in 2011.
Meanwhile, investors were “positive” on the Mexican macro outlook stemming from their view on prospects in the U.S., and that Mexico’s credit story “could cause domestic demand to continue to surprise on the upside,” the B. of A. economists wrote. Main concerns were about upcoming elections in Mexico.
marketwatch.com
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